BOJ Ponders Rate Hike as Inflation Risks Rise Amid Global Turmoil

The Bank of Japan (BOJ) is likely to consider raising its policy interest rate at its next meeting on September 17-18, according to informed sources. This would be the first rate hike in three months and would bring the rate to around 1.25%.

The last time the policy interest rate stood at 1.25% was back in April 1995. The BOJ's decision comes as the probability of achieving its 2% inflation target rises, reflecting upside risks to prices driven by the Middle East turmoil, yen weakness, and increasing AI-related demand.

BOJ Governor Kazuo Ueda stated at a recent press conference that 'we are coming quite close' to the price stability goal. He added that the bank will fully discuss a rate increase at every policy meeting, including the next one.