BoJ Set to Raise Rates Amid Inflation Pressure, Yen Weakness

The Bank of Japan is set to raise interest rates again on Friday to combat inflation and support the yen, under pressure from both domestic and international forces.

With inflation fueled by surging energy prices and a weak yen driving up costs, officials have been signaling a rate hike. The US Federal Reserve's decision on Wednesday will be closely watched, but markets expect the BoJ to follow suit with its own increase.

Some members of the BoJ have indicated that they will raise the key rate by 0.25 percentage points to 1.25 percent, the highest level in over three decades. This would be the last hike since June and would bring rates closer to the two percent target set by the BoJ.

Takehiko Nakao, Japan's former currency chief, warned that delaying rate hikes could lead to sharp increases down the line, saying 'In the face of advancing inflation, interest rates must be raised in a timely manner to contain it.' Marcel Thieliant of Capital Economics also expects further closely spaced hikes as the war in the Middle East continues.