BOJ Poised for Rate Hike Amid Inflation Fears and US Pressure
The Bank of Japan (BOJ) is poised to raise interest rates again on September 18 to counter inflation fueled by surging energy prices and support the yen, under pressure from Washington.
Some BOJ members have sent signals suggesting they will increase their key rate by 0.25 percentage points to 1.25 per cent, its highest level in more than three decades.
The last hike was in June, but pressure has increased on officials to lift borrowing costs as the spike in oil prices caused by the Middle East crisis is expected to keep upward pressure on inflation.
Takehiko Nakao, Japan's former currency chief and former president of the Asian Development Bank, warned that if the response is delayed, rates may need to be raised sharply.
Marcel Thieliant of Capital Economics predicts that inflation excluding fresh food and energy will rise further towards 2.5 per cent by early 2027, while a weak yen has also driven up the cost of imported goods.