BOJ Still Expected to Raise Interest Rates as Japan's Inflation Ticks Up

Japan's inflation rate has ticked up for the first time in three months, rising to 1.6% in June. The increase is largely due to energy costs, which while declining thanks to government subsidies, are doing so at a slower pace than previously seen.

The Bank of Japan (BOJ) is still expected to raise interest rates this year despite the yen's decline, with policymakers becoming increasingly concerned about upside inflation risks. The central bank had raised its benchmark rate to its highest level since 1995 last month.

While the data supports the BOJ's decision to keep raising interest rates, it is likely that no change will be made when the central bank convenes on July 31. Officials prefer to wait and evaluate the effects of their recent actions before making another move.