BOJ to raise rates to 1.25% this month, reach 1.75% faster than expected - Reuters

The Bank of Japan is reportedly set to raise its policy rate to 1.25% this month, with Reuters reporting that the central bank may reach 1.75% sooner than previously expected. If realised, this would extend Japan's gradual exit from years of ultra-loose monetary policy, a shift that has been closely watched since the BOJ began normalising rates.

The pace matters as much as the level. A faster path to 1.75% implies policymakers see inflation or wage growth holding above target, or a yen weak enough to warrant tighter conditions. Higher Japanese yields can influence global bond markets, since Japanese investors are major holders of overseas debt; a stronger yen may also affect export-heavy Japanese equities and carry-trade positions funded in yen.

What to watch: the BOJ's actual decision and any guidance on the terminal rate, the yen's reaction, and Japanese government bond yields, especially at the long end. Confirmation of the move may already be partly priced in, so the language around future hikes could matter more than the increase itself.