BOJ Set to Raise Rates to 1.25% Amid Inflation Concerns

The Bank of Japan (BOJ) is expected to raise its policy rate by 25 basis points to 1.25% next week, marking the highest level in 31 years.

This move would be the second rate hike in roughly three months, following a June increase to 1.0%, and underscores the BOJ's accelerating pace of monetary tightening.

BOJ board member Masu Kazuaki said that the underlying inflation rate has come 'quite close to the 2%' target, and that continued rate hikes are necessary to control prices.

Markets are nearly certain of a rate hike next week, with a 97% probability assigned in the interest rate swap market. The focus has shifted from 'whether to hike' to 'the communication strategy after the hike.'