The Bank of Japan said core inflation may exceed its 2% target and pledged to
continue raising borrowing costs as economic and price trends warrant. It
revised its growth-risk assessment to balanced rather than tilted to the
downside, saying the hit from Middle East tensions has been smaller than feared
as global AI demand provided a buffer. The bank warned yen weakness could
amplify inflationary pressure, increasing the likelihood of further tightening.
Investors have stepped up bets on a rate hike before October; Governor UEDA's
press conference this afternoon may provide confirming signals.
