Japan Set to Hike Rates Under Pressure from Inflation and Washington
The Bank of Japan is expected to raise interest rates on Friday to combat inflation driven by rising energy prices and support the yen, under pressure from Washington.
Markets are awaiting the US Federal Reserve's decision on Wednesday after the European Central Bank announced an increase last week.
The BoJ's key rate has been at 1% for more than three decades, but some of its members have signaled a 0.25 percentage point hike to 1.25%, which is already priced in by markets.
A weak yen and high inflation are driving the need for higher interest rates, as Japan's economic growth slows due to global factors such as the Middle East crisis.
Former BoJ Governor Takehiko Nakao warned that if the response to inflation is delayed, it may lead to sharp rate hikes in the future.