The Bank of Japan is reportedly willing to consider a faster pace of interest rate hikes due to the increased risk of inflation caused by the depreciation of the yen.

According to informed sources, due to the continued weakness of the yen exacerbating inflationary risks, Bank of Japan officials are open to a faster pace of interest rate hikes than economists generally expect. The market consensus is that the Bank of Japan will maintain its policy unchanged at the meeting on July 31st. The bank raised its benchmark interest rate to 1% last month, the highest level in 31 years. Most Bank of Japan watchers expect the bank to hike rates again in December. They state that bank officials are aware that many observers expect them to act about every six months, but they do not rule out acting more quickly if necessary and have not set any timetable.