The Bank of Japan will likely raise its benchmark interest rate at its September 18 policy meeting and follow with another increase as early as January, Seiji Adachi, who served on the BOJ board until March 2025, Bloomberg News reported Monday, citing an interview.

Traders were assigning roughly an 80% probability of a hike at the September meeting as of Monday afternoon in Tokyo, the report said.

Adachi said holding rates steady risks reigniting a yen selloff and faster import-driven inflation, and that comments from US Treasury Secretary Scott Bessent urging BOJ Governor Kazuo Ueda to raise rates gave Ueda cover to act, according to the report.

He expects the hiking cycle to extend beyond the 1.25%-1.5% range once seen as terminal, potentially reaching around 2.75%, with the BOJ's rate at 2% or higher by the end of next year - above the 1.5% median forecast in a Bloomberg survey.