BoJ Set to Hike Rates Amid Inflation and US Pressure

The Bank of Japan is poised to raise interest rates for the second time this year to combat inflation and support the yen, amid growing pressure from Washington.

Market expectations are that the BoJ will increase its key rate by 0.25 percentage points to 1.25 percent, the highest level in over three decades.

The decision comes as the global economy faces rising energy prices and a weak yen, which has been driven down by Japan's still-low interest rates compared to those of the US Federal Reserve.

Takehiko Nakao, Japan's former currency chief, said that the BoJ must raise interest rates in a timely manner to combat inflation, warning that delaying the response could lead to sharp rate hikes later on.

The BoJ is under pressure from Washington to accelerate its rate hike pace, following a joint intervention with the US in foreign exchange markets last month to support the yen.