BoJ Rate Hike Chances Soar as Japan Inflation Hits Six-Month High

The Bank of Japan's (BoJ) September rate hike has become more likely as market pricing jumps to around 80% from 65% in early August, following media reports suggesting government support for an earlier tightening move.

The BoJ's key inflation gauge, core CPI, is expected to rise to a six-month high of 1.8% year-on-year in July, up from 1.6% in June, according to median forecasts.

Rising import costs due to Middle East tensions and a weaker yen are driving the broader uptrend, despite falling food prices and government measures capping gasoline and utility costs.

Analysts expect the policy rate to reach 1.25% in September, with some seeing scope for the BoJ to accelerate its tightening pace as underlying inflation nears the 2% target.