BOJ Set to Raise Interest Rates to 31-Year Peak Amid Inflation Pressures

The Bank of Japan is set to raise interest rates on Friday for the first time in three months, marking a new peak in borrowing costs since 1991. According to Leika Kihara's reporting for Reuters, this move would place the central bank alongside other major institutions seeking to counter stubborn inflation pressures.

The increase would lift the policy rate to 1.25% from 1%, with many within the BOJ preferring a 25-basis-point hike over a larger one due to concerns about how previous rate hikes have affected financial conditions.

Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management, noted that markets are divided between those who view hawkish BOJ messaging as reducing bond yields and those who see it raising yields by bringing forward terminal-rate wagers.