The Bank of Japan (Japan's central bank, which sets monetary policy for the world's fourth-largest economy) is expected to hold interest rates steady at 1% at its Friday meeting while signalling openness to further hikes, as inflation builds from a weak yen, rising energy costs tied to the Middle East conflict, and strong global demand for AI-related goods. Governor Kazuo Ueda faces the delicate task of communicating a hawkish outlook to deter yen weakness without alienating the government of Prime Minister Sanae Takaichi, which has been critical of aggressive tightening. Analysts polled by Reuters anticipate the BOJ will raise rates to 1.25% by December, though a hike could come as early as October if inflation overshoots or the yen continues to slide.