BOJ Governor says inflation nears 2% target, rate hike to be discussed

Kazuo Ueda, governor of the Bank of Japan, told reporters that underlying inflation is moving toward the 2% target, prompting the policy board to deliberate a possible interest-rate hike at its upcoming September session. His comments followed a meeting of G20 finance leaders, where he said the bank will monitor upside risks to inflation in shaping policy. The BOJ had left rates unchanged at its July meeting, pointing to currency fluctuations, the ongoing Middle East war and growing demand for artificial intelligence as influencing factors.

Persistent yen weakness and rising energy prices amid the Iran conflict have intensified price pressures in Japan. Ueda signaled that the board will discuss the rate path at every meeting, including the one on Sept. 17-18. Meanwhile, yields on benchmark Japanese government bonds briefly topped 3% in Tokyo, the highest level since 1996.