BOJ Prepares for Biggest Rate Hike Since 1990

The Bank of Japan (BOJ) is poised to raise interest rates to a 31-year high of 1.25% at its two-day meeting on Friday, despite the country's inflation rate having cooled slightly in August.

The core inflation rate, which excludes fresh food, rose 1.7% from a year earlier, while a second gauge that also excludes energy came in at 1.9%, still below the BOJ's 2% target.

Policymakers are concerned that inflation could re-accelerate if the yen continues to weaken, which has been driving up import costs and fuel prices.

Analysts polled by Reuters expect a rate hike to 1.25%, with further increases predicted in the coming months, potentially reaching 1.5% by end-March next year and 1.75% in the second quarter of 2027.