BOJ Set to Raise Interest Rates to 31-Year High Amid Global Rate Hike Cycle

The Bank of Japan (BOJ) is set to raise interest rates on Friday to a 31-year high, taking its policy rate to 1.25% from 1%. This move would be in line with global peers and counter inflation risks, which could heighten if the start of a U.S. rate-hike cycle weakens the yen against the dollar.

The BOJ's decision is widely expected, but it comes under pressure to keep pace with the Federal Reserve, which hiked rates on Wednesday. A widening of the already big U.S.-Japan rate gap could weaken the yen and lift inflation through higher import costs.

Analysts say that the BOJ will be under huge pressure after the Fed's move, and Governor Kazuo Ueda's post-meeting briefing will be closely watched by markets for clues on the timing and pace of further increases.