BOJ Set to Raise Interest Rates as Japan's Inflation Pressures Mount

Japan's core inflation rate has held steady near the Bank of Japan's (BOJ) target of 2% in August, according to data released on Friday. The core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, rose 1.7% in August from a year earlier, compared with a median market forecast for a 1.8% gain.

The BOJ is set to raise interest rates to a 31-year high of 1.25% later on Friday, following its two-day meeting. This decision comes as the country faces mounting price pressures due to rising fuel costs from the Middle East conflict and higher import prices from a weak yen.

Core inflation has stayed below the BOJ's target for eight straight months, with government subsidies aimed at curbing utility bills offsetting price hikes for a broad range of goods. However, analysts expect the BOJ to hike rates this week and may signal faster future tightening if price pressures continue to rise.