BOJ Poised to Hike Rates by Quarter Point Amid Inflation Pressures

The Bank of Japan (BOJ) is poised to raise its key interest rate by 25 basis points during its next policy meeting on September 18, according to sources with direct knowledge of the matter. This move would bring the benchmark rate from its current level of 1%.

The BOJ officials are inclined to hike rates due to rising inflation pressures, driven by services costs and a soft currency. However, they do not see any significant shift in economic activity that would warrant a more aggressive half-point increase at this time.

US Treasury Secretary Scott Bessent has expressed support for higher Japanese interest rates, citing the importance of prudent policy design to stabilize inflation expectations and curb excessive currency swings. Overnight index swap pricing indicates investors are fully anticipating the rate adjustment within two weeks.