BOJ Readies Aggressive Rate Hike Amid Inflation Fears

The Bank of Japan is preparing to raise interest rates as early as September and may increase its pace of tightening, according to sources familiar with the central bank's thinking.

An 'early rate hike has come into sight', one source said, suggesting a strong likelihood that the BOJ will raise rates at its next policy meeting on September 17 and 18. This would reflect growing concerns over price pressures stemming from the Middle East conflict, strong global demand for AI, and the yen's downtrend.

The BOJ has raised interest rates roughly twice a year since exiting a massive stimulus in 2024, but may accelerate its pace of increases to address mounting inflation risks. The two-year Japanese government bond yield rebounded after Reuters initially reported on the central bank's deliberations.