BOJ Weighs September Rate Hike Amid Rising Price Pressures

The Bank of Japan (BOJ) may raise interest rates in September and potentially accelerate its pace of rate hikes to twice a year by 2026, according to sources familiar with the BOJ's thinking.

The central bank is becoming increasingly concerned about price pressures stemming from the Middle East conflict, strong global demand related to artificial intelligence (AI), and continued yen weakness despite coordinated intervention by Japan and the United States last month.

An interest rate hike is likely to come earlier than previously expected, one source said, indicating a strong possibility that the BOJ will raise rates at its September 17-18 policy meeting.

The BOJ has raised interest rates roughly twice a year since ending its decade-long massive stimulus program in 2024. In June, the BOJ raised its policy rate to 1%, the highest level in 31 years.