The Bank of Japan (BOJ) is reportedly discussing the possibility of a 15 basis points (bps) interest rate hike, instead of the anticipated 10 bps increase. This adjustment would raise rates from the current 0.10% to 0.25%, with some board members expressing concerns about the risk of yen depreciation leading to higher prices. Sources suggest that additional interest rate hikes could be on the table at the upcoming meeting on the 31st, including proposals to raise the policy rate from its current range of 0% to 0.1% to around 0.25%.

Despite the considerations for a rate hike, some board members are approaching the decision cautiously, citing the need to monitor consumption trends amid ongoing negative real wages. The final decision on interest rate adjustments will be made following a thorough analysis of the latest economic data. In addition, the BOJ is set to decide on a specific plan to reduce government bond purchases, further influencing market dynamics.

Following the initial news report, the yen experienced a temporary jump in value, although it has since mostly stabilized. Investors continue to monitor the USD/JPY exchange rate closely as the BOJ deliberates on potential policy changes. The upcoming meeting on the 31st is expected to shed more light on the central bank's strategies regarding interest rates and bond purchases, impacting both domestic and international financial markets.