Bank of Japan policymakers are leaning toward a 25-basis-point rate hike this month, according to sources, citing upside inflation risks and a weak yen. The move is expected to be accompanied by a flexible approach to future rate adjustments, with a 50-bps hike deemed unlikely.
The Bank of Japan (BOJ) is leaning toward raising its benchmark interest rate by 25 basis points at its meeting this month, according to sources familiar with the matter. The move comes as policymakers address upside inflation risks and plan to maintain flexibility in the pace of future tightening.
Rising service prices and the persistent weakness of the yen have strengthened the case for action, the sources said. BOJ officials will discuss the possibility of a rate increase and continue to see inflation risks as tilted to the upside. Economic developments remain broadly in line with the central bank's forecasts, reducing the likelihood of a larger 50-basis-point move. One source said this has lowered market expectations for a “significant rate hike.”
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