BOJ Ponders Rate Hike Amid Inflation Worries

Bank of Japan (BOJ) Governor Kazuo Ueda hinted at a potential interest rate hike in September, citing concerns over inflationary risks. Speaking at a news conference after attending the G20 finance leaders' gathering in Asheville, North Carolina, Ueda said that the BOJ would debate raising rates, including in September, to assess whether the economy and prices are moving in line with their projections.

The decision comes as global inflation remains a concern, with Japan's 10-year bond yield hitting 3% for the first time since 1996. Ueda emphasized that the BOJ must pay particular attention to inflationary risks when guiding policy, particularly given the weak yen and robust AI-related demand.

Hawkish BOJ board member Hajime Takata also weighed in on the issue, suggesting that the central bank should raise rates nimbly in response to inflationary pressures. The comments helped lift the yield on Japan's two-year government bonds (JGB) to 1.830%, the highest since 1995.