BOJ Set to Lift Rates to 1.25%, Modest Inflation Recovery

The Bank of Japan (BOJ) is set to raise interest rates for the second time this year, according to Reuters. The central bank is leaning towards a 25-basis-point hike to 1.25%, which would be its highest level in over three decades.

This move comes just months after the BOJ raised rates to 1% in June. Officials believe that the economy is in a moderate recovery and that underlying inflation is close to the BOJ's 2% goal, with rising input costs still filtering through the system.

The yen has already strengthened by more than 6% since Japan and the US intervened in late July. However, higher oil prices have pushed policymakers to remain cautious of inflation running hotter than expected.