According to people familiar with the matter, driven by the risk of rising prices, the Bank of Japan is inclined to raise the benchmark interest rate by 25 basis points this month, while maintaining a flexible attitude about the pace of future interest rate hikes. People familiar with the matter said that during the two-day interest rate meeting that ends on September 18, Bank of Japan officials will consider raising the policy interest rate from 1%. Officials are still judging that the risk of inflation is rising overall. Higher service prices are compounded by the continued weakening of the yen, further confirming the need for interest rate hikes. People familiar with the matter said that at present, officials have determined that the economy is generally in line with previous expectations. One of the people familiar with the matter downplayed the possibility of a sharp interest rate hike, saying that there have been no major changes in the current situation, and there is no need to adopt a larger rate hike of 50 basis points. People familiar with the matter said that the central bank is also aware of the potential need to continue to raise interest rates after September, and is willing to flexibly adjust the pace of interest rate hikes according to economic performance and the risk of rising inflation. This means that if the situation requires it, the Bank of Japan will not rule out speeding up the pace of interest rate hikes.

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