LATEST: Japan is preparing markets for ANOTHER rate hike.

BOJ Deputy Governor Ryozo Himino says policymakers will debate the pace and timing of further hikes at each meeting as they seek to stabilise underlying inflation around 2%.

The BOJ hasn't committed to September, but markets are now pricing nearly a 90% chance of a hike at the Sept. 17–18 meeting.

Japan's policy rate is already at a 31-year HIGH of 1%, with another 25bps hike taking it to 1.25%.

Currently, Japan's key indicators are sitting at:

- Wholesale inflation: +7.2%

- Core inflation: 1.8%, up from 1.6%

- USD/JPY: 159.35

Himino says the timing and pace will also reflect risks from FX moves, AI-related demand and the Middle East conflict.

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FOLLOWUP (0.88, took 0.6s):

JAPAN IS ABOUT TO CREATE ANOTHER MASSIVE PROBLEM FOR GLOBAL MARKETS.

The Bank of Japan is moving closer to another rate hike, with markets now pricing an 82% chance of a September move.

BOJ Deputy Governor Ryozo Himino says the bank needs to pay more attention to the risk of inflation moving above its 2% target.

The BOJ has been raising rates roughly every six months. A September hike would come much sooner, signaling that Japan is accelerating its rate hikes.

And the BOJ has a reason to act.

The yen remains near 160 per dollar, while the Middle East conflict is making imported oil and food more expensive.

But higher Japanese rates create another problem.

For decades cheap money in Japan pushed huge amounts of capital into foreign assets, including U.S. Treasuries.

Higher rates at home make those foreign investments less attractive.

That raises the risk of more money returning to Japan, putting additional pressure on global bonds and yields.

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