BOJ Warns of Inflation Risks, Ponders Faster Rate Hikes Amid Global Pressure

The Bank of Japan (BOJ) has flagged rising inflation risks and hinted at the possibility of faster interest rate hikes. A summary of opinions from the BOJ's July meeting revealed that one board member suggested an acceleration in policy rate increases, citing growing upside price risks.

The BOJ's decision to keep its policy rate at 1% during the meeting was seen as hawkish, with Governor Kazuo Ueda emphasizing greater upside risks to the price outlook. The central bank also signaled a possible rate hike in September, while market players see a two-thirds chance of a move by then.

The yen's weakness and global rate hikes have fueled expectations for an early BOJ move. The Japanese currency has been under pressure, weakening to a 40-year low against the dollar last month, stoking concerns over import-driven inflation in Japan and risks to global financial market stability.