BOJ Signals Rate Hike Consideration Amid Inflation Risks

Bank of Japan Governor Kazuo Ueda signaled consideration of an additional rate hike in September, citing upside inflation risks. Speaking at a press conference following the G20 Finance Ministers and Central Bank Governors Meeting in Asheville, North Carolina, Ueda emphasized that the BOJ will 'thoroughly discuss' the possibility of a rate hike at its next meeting on September 17-18.

Ueda noted that the underlying inflation rate is 'quite close to 2%', indicating confidence in achieving the target. He also stated that economic indicators released since the previous meeting have 'largely been in line with our outlook,' but added that the BOJ will take upside risks into account when making policy decisions.

The BOJ's decision to prioritize inflation risks suggests that it may raise interest rates at its next meeting, which would be a significant move given the current market expectations. The probability of a rate hike at the September 18 meeting has reached approximately 99% based on short-term money market indicators.