BOJ Set to Raise Rates to 31-Year High Amid US Rate Hike Pressure

The Bank of Japan is set to raise interest rates on Friday to their highest level in 31 years, at 1.25 per cent, in a move that will bring it closer to neutral levels and counter inflation risks.

This decision comes after the Federal Reserve hiked interest rates on Wednesday, putting pressure on the BOJ to keep pace, as a widening of the US-Japan rate gap could weaken the yen and lift inflation through higher import costs.

Analysts say that this move will heighten concerns about the tone of BOJ Governor Kazuo Ueda's post-meeting briefing, which will be closely watched by markets for clues on the timing and pace of further increases.