BOJ Outlook Report Strengthens Case for September Rate Hike

The Bank of Japan (BOJ) has strengthened expectations for another interest rate increase as early as September, according to its latest economic outlook report.

Despite keeping its policy rate at around 1.0% in July, the central bank emphasized the risk that inflation will rise above its 2% target.

Mari Iwashita, executive rates strategist at Nomura Securities and a closely followed BOJ analyst, noted that the report contained several hawkish changes suggesting policymakers are becoming increasingly concerned about upward pressure on prices.

The BOJ revised its assessment of risks to economic growth, saying they were now broadly balanced. However, risks to inflation remained tilted to the upside.