BOJ Caught in Dilemma over Next Rate Hike

Tokyo, April 19 (Jiji Press)--The Bank of Japan faces a dilemma of choosing between reining in inflation and propping up the economy as it considers whether to raise the policy interest rate at its next policy-setting meeting April 27-28.

The Japanese central bank will carefully assess the economic impact of soaring crude oil prices reflecting lingering tensions in the Middle East. Raising the policy rate to contain inflation could chill the economy, while choosing not to do so to support the economy may fuel inflationary pressure.

The BOJ is expected to make a final decision after closely monitoring peace talks between the United States and Iran as well as other factors until the last minute.

The central bank last raised its target for the unsecured overnight call rate, Japan's benchmark short-term interbank rate, in December 2025, setting it at the current 0.75 pct.

It has indicated that it will continue to normalize monetary policy, prompting many to focus on when the next rate increase will be. Financial market players had widely anticipated the next hike to come as early as this month.

[Copyright The Jiji Press, Ltd.]