BOJ to Consider Rate Hike in Earnest at Sept. 17-18 Meeting

Tokyo, Sept. 4 (Jiji Press)–The Bank of Japan is expected to consider in earnest raising its policy interest rate by 0.25 percentage point to around 1.25 pct at its next policymaking meeting Sept. 17-18, informed sources said. It would be the Japanese central bank’s first rate hike in three months. The last time the policy interest rate stood at 1.25 pct was back in April 1995. With the probability of the BOJ achieving its 2 pct inflation target rising, the envisaged rate hike will come as a way to tackle the upside risks to prices reflecting the Middle East turmoil, the yen’s weakness and increasing artificial intelligence-related demand. At a press conference held Wednesday, Japan time, after the end of a meeting of the Group of 20 finance ministers and central bank chiefs in Asheville, North Carolina, BOJ Governor Kazuo Ueda said that “we are coming quite close” to the price stability goal. “We’ll fully discuss (a rate increase) at every policy meeting, including the next one,” he added. At a meeting with Ueda held in Asheville on Sunday on the sidelines of the G20 meeting, U.S. Treasury Secretary Scott Bessent called for an early interest rate hike by the BOJ, saying that he strongly supports Japan taking decisive market and monetary policy measures to prevent the yen’s excessive weakening. Although the BOJ decided at a Policy Board meeting in June to raise the policy rate to around 1.0 pct from around 0.75 pct as part of its monetary policy normalization moves, financial conditions remain accommodative, with lending remaining on an upward trend. Many financial market players have believed that the central bank would implement an interest rate hike about once every six months. But the BOJ appears ready to increase the pace of rate hikes as more and more companies are seen moving to reflect soaring crude oil costs in prices of their products and services going forward, possibly leading to greater upside risks to inflation, BOJ watchers said. END [Copyright The Jiji Press, Ltd.]