BOJ Shifts Towards Faster Rate Hikes Amid Inflation Risks
The Bank of Japan (BOJ) is expected to raise interest rates faster and more regularly in the future as it pre-empts risks of an inflation overshoot.
This shift in policy comes after the BOJ raised its policy rate from 1.0% to 1.25% in September, marking a pivot towards fighting inflation rather than focusing solely on downside economic risks.
BOJ Governor Kazuo Ueda has stated that the central bank will act 'pre-emptively' to avoid being forced to take extreme steps and that underlying inflation is converging around 2%.
Market players see chances of an October hike, with a weak yen pushing up import prices and the broader cost of living for households. However, BOJ officials have set a high hurdle for an October hike, requiring external shocks to boost risks of an inflation overshoot.