Rising prices in Japan fuel debate over potential BOJ rate hikes

Bloomberg reports, citing sources familiar with the matter, that Bank of Japan (BOJ) officials have noted that prices are rising faster than initially projected at the start of the year. This could pave the way for discussions about raising interest rates, especially if global trade tensions begin to ease. However, uncertainty persists for now, and the central bank is likely to proceed with caution.

Japan’s inflation accelerated to 3.5% in April, surpassing analysts’ expectations. According to Bloomberg experts, this trend is driven by shifting consumer behavior and rising prices of key goods, such as rice. With inflation outlook among households now improving, the central bank may face stronger pressure to adjust its monetary policy.

Economists surveyed by the news agency say the BOJ could hike rates by year-end if trade conditions show signs of recovery. Right now, 34% of the respondents expect this move as early as January. 

At its upcoming meeting scheduled for Monday and Tuesday this week, the central bank is expected to keep its interest rate steady at 0.5%.