BOJ Set to Raise Rates to 1.25% Amid Building Inflation Risks

The Bank of Japan (BOJ) is expected to raise its interest rate by 25 basis points next week, taking it to 1.25% - a level not seen in 31 years.

This move would mark another significant step towards normalizing monetary policy in Japan after decades of ultra-loose policy.

The BOJ raised rates to 1% in June and indicated that borrowing costs would continue to rise if economic and price developments aligned with its forecasts.

A Reuters poll shows analysts expect the policy rate to reach 1.5% by the end of March next year and 1.75% in the second quarter of 2027, with most anticipating a terminal rate of at least 1.75%.