BOJ Set to Hike Rates Amid Inflation Pressures

The Bank of Japan is set to raise its key interest rate on Friday in response to rising energy costs and a sharply weaker yen, intensifying pressure to contain inflation and support the currency.

The anticipated 0.25-percentage-point increase would take the benchmark rate to its highest level in more than three decades, reaching 1.25%.

This move follows the bank's previous rate hike in June and comes as markets watch monetary policy moves by the US Federal Reserve and European Central Bank.

Economists expect inflationary pressure to persist if energy prices remain elevated, with Marcel Thieliant of Capital Economics predicting that inflation excluding fresh food and energy could rise towards 2.5% by early next year.