BOJ Ponders Early Rate Hike Amid Rising Inflation Fears

The Bank of Japan (BOJ) is considering raising interest rates as soon as September and may increase the pace of tightening, according to sources.

This move would reflect the BOJ's growing alarm over price pressures from the Middle East conflict, strong global AI demand, and the yen's downtrend, which has persisted despite last month's Japan-U.S. joint intervention.

The BOJ raised interest rates at a pace of roughly twice a year since exiting a massive stimulus in 2024, with the current rate standing at 1 per cent, a 31-year high.

Sources suggest that the BOJ may accelerate the pace of rate hikes to avoid being behind the curve on inflation, which is nearing its 2 per cent target.