BOJ Rate Hike Looms as Japan Seeks to Defend Yen

The Bank of Japan (BOJ) is likely to raise interest rates in September or October to bolster the yen, according to sources close to the Japanese government.

This move would mark the fastest pace of monetary tightening since 1989 and comes after a joint intervention by the U.S. and Japan to buy yen last month.

The BOJ is concerned that yen weakness is adding to inflationary pressure, with import prices rising due to the currency's decline.

Markets are pricing in about a 74% chance of a rate hike at the BOJ's Sept. 18 meeting, and such a move would be the third increase since Prime Minister Sanae Takaichi took office.