BOJ Prepares for 25-Basis-Point Rate Hike Next Week

The Bank of Japan (BOJ) is set to raise interest rates next week, likely by 25 basis points, bringing its policy rate to levels unseen in 31 years. A hike to 1.25% would be a significant move, as the BOJ's current rate is at 1%. This increase suggests a faster pace of tightening, especially if the bank raises rates again this year.

The decision comes just three months after the BOJ's last interest rate hike in June, indicating that the central bank may be accelerating its monetary policy. Many within the BOJ see conditions falling into place for another rate hike, with the economy on course for a moderate recovery and price pressures heightening the risk of an inflation overshoot.