BOJ Weighs Rate Hike as Japan's Inflation Nears 2% Target

Japan's central bank is considering raising interest rates as inflation inches closer to its 2% target, according to Bank of Japan chief Kazuo Ueda. At a meeting with G20 finance ministers in North Carolina, Ueda said that underlying inflation is nearing the BOJ's price stability goal.

The BOJ will discuss the possibility of another interest rate increase at its next meeting on September 17 and 18. Many market participants expect the central bank to raise its policy rate from the current 1% due to upside risks to inflation.

Ueda cited currency movements, the Middle East conflict, and demand for artificial intelligence as key factors affecting inflation and future policy decisions. The yen's persistent weakness has added to inflationary pressures in resource-scarce Japan, along with higher energy prices amid the Iran war.