BOJ Leans Towards September Rate Hike Amid Inflation Worries

The Bank of Japan (BOJ) is reportedly leaning towards a 25-basis-point rate hike in September, according to informed sources. This move would aim to address upside risks to prices, particularly rising service prices and the continued weakness of the yen.

While BOJ officials will consider raising the policy rate from 1% at their two-day meeting ending on September 18, they do not rule out further acceleration if circumstances warrant it. This flexibility in monetary policy suggests that the BOJ is taking a cautious approach to inflation risks.

The decision comes under increased scrutiny from Washington, with U.S. Treasury Secretary Bessent expressing his desire for Japan to raise interest rates. Bessent emphasized the importance of stabilizing inflation expectations and avoiding excessive currency volatility during a bilateral meeting with BOJ Governor Kazuo Ueda.