Bank of Japan to Hit 31-Year Rate Peak, Signals More Hikes Ahead

The Bank of Japan is set to increase its short-term policy rate to 1 percent, the highest level since 1995. The move, expected on Tuesday, accelerates the central bank's departure from massive stimulus toward a conventional inflation-fighting stance.

Eight board members will vote. Governor Kazuo Ueda is hospitalized for a liver cyst treatment and will not participate. Deputy Governor Shinichi Uchida is expected to emphasize readiness for further tightening without locking in a specific timeline.

Global energy shocks and a weak yen continue pressuring prices. Wholesale inflation hit a three-year high of 6.3 percent in May. Former BOJ top economist Seisaku Kameda predicts another rate increase between October and December.

The expected hike aligns the BOJ with the European Central Bank and others pivoting to tighter monetary policy.