BOJ Expected to Raise Rates by 25 Basis Points Amid Inflationary Pressures
The Bank of Japan (BoJ) is expected to raise interest rates by 25 basis points at its upcoming two-day meeting, according to a CNBC survey. This would bring the rate to 1.25%, marking an acceleration in the central bank’s tightening cycle and breaking from its six-month interval pattern since March 2024. The decision is driven by rising inflation—Japan's headline inflation hit 1.9% for July—and increasing real wages, along with pressure from U.S. officials like Treasury Secretary Scott Bessent. The survey of 18 economists and analysts found that around 89% anticipate a rate hike this week. Additionally, most respondents expect the yen to trade between 155 and 160 in the next month. Some experts believe hawkish comments from BoJ board members indicate openness to faster tightening, while dissenters like Toichiro Asada and Ayano Sato are seen as potential holdouts. The U.S.-Japan policy dialogue has also influenced expectations, with Bessent urging decisive action on inflation control at the G20 meeting. Analysts suggest that political dynamics in Japan have allowed the BoJ to proceed independently without interference from domestic factions.
Topics: BOJ inflation interest rates monetary policy yen