BOJ Set to Hike Interest Rate Amid Inflation Concerns

The Bank of Japan (BOJ) is set to raise its key interest rate by 0.25 percentage points in September, according to sources familiar with the matter. This would bring the rate to 1.25 percent from the current 1.0 percent, marking a significant increase since the BOJ ended its negative interest rate policy in March 2024.

The move is aimed at addressing concerns over inflation and the weak yen, which has been largely driven by the interest rate gap between Japan and the United States. The BOJ has raised rates about every six months since ending its negative interest rate policy, and a September hike would mark the first increase in three months.

Pressure from the U.S. President Donald Trump's administration to correct the yen's depreciation against the dollar has also been a factor. Treasury Secretary Scott Bessent told U.S. media on August 31 that he is confident the Japanese government and the BOJ will take steps to strengthen the yen.