BOJ Signals Faster Rate Hikes Amid Hawkish Shift and Weakening Yen

The Bank of Japan (BOJ) has signaled that it may raise interest rates faster than markets expect, according to minutes from its latest monetary policy meeting. The BOJ kept its benchmark rate unchanged at 1% but hinted that another rate hike could come as early as September.

Hawkish views have emerged within the BOJ, with some policymakers arguing that the pace of rate hikes should exceed market expectations. One board member noted that upside inflation risks warrant greater attention than before, given core consumer price index growth nearing 2%.

The yen's recent slide to its weakest level against the dollar in 40 years has fueled expectations for an earlier rate increase. Markets are already pricing in a high chance of a September hike, with overnight swaps indicating about a 67% probability and a near certainty of a move by October.