BOJ Set to Signal More Rate Hikes Amid Growing Inflationary Pressure

The Bank of Japan is expected to keep interest rates steady at its upcoming meeting, but signal more rate hikes in the future due to growing inflationary pressure from the Middle East conflict and a weak yen.

Central bank Governor Kazuo Ueda faces a delicate balance between communicating hawkish policies and not antagonizing the government, which has been critical of further policy tightening.

Analysts at Mitsubishi UFJ Morgan Stanley Securities predict that the BOJ will maintain its view that risks to the price outlook are skewed to the upside and may raise rates as early as December, or potentially in September or October if inflation overshoot is a concern.