BOJ Set to Raise Rates to 31-Year High Amid Inflation Concerns

The Bank of Japan (BOJ) is set to raise its interest rate to a 31-year high on September 18, 2026. This move comes after the Federal Reserve's rate hike on Wednesday and the prospects of another increase later this year. The BOJ's policy rate is currently at 1%, and it is expected to rise to 1.25%.

The decision to raise interest rates is seen as a response to inflation risks, which may be heightened if the start of a U.S. rate-hike cycle weakens the yen against the dollar. Critics say the slow pace of BOJ hikes has been among factors keeping the yen weak, leading to a spike in wholesale inflation that is seen spilling over to consumer prices.

BOJ Governor Kazuo Ueda will hold a press conference after the policy meeting, and markets are closely watching for clues on the timing and pace of further increases. Analysts expect the BOJ to hike rates at least twice more this year, but some warn that the bank may struggle to keep pace with global peers.