BOJ Rate Hike Next Week: What to Expect

The Bank of Japan's (BOJ) interest rate hike next week is all but certain, with a 25-basis-point increase to 1.25% widely expected.

However, the market is more interested in the signals the BOJ sends regarding its terminal interest rate and the pace of tightening.

According to sources familiar with the matter, the BOJ holds no predetermined view on the final terminal rate, which will depend on how previous increases transmit through the economy and the extent to which businesses pass rising input costs on to households.

The divergence within the Policy Board is significant, with some members believing underlying inflation has reached the 2% target while others remain more cautious.