The Bank of Japan is expected to raise interest rates by 25 basis points next week, lifting the policy rate to 1.25%, its highest level in 31 years. The move would follow the central bank’s June rate hike by just three months, signaling a faster pace of tightening. The Bank of Japan believes the economy is recovering moderately and price pressures are building, while financial conditions would remain accommodative even at 1.25%. Governor Kazuo Ueda’s post-meeting remarks may offer clues on the upper limit of rates in this tightening cycle and the pace of future increases, though the central bank has no preset view on the terminal rate.