The Japanese central bank's officers could look into a quarter-percentage-point rise in the policy rate in June, Bloomberg News reported Thursday, citing people familiar with the matter.
If pursued, the move could raise the benchmark interest rate to 1% at the central bank officials' meeting between June 15 and 16, according to the report's sources.
Another rate increase is also possible later this year, given still-low real interest rates and lingering upside inflation risks, the newswire's sources said.
A rate increase could meet some resistance, although this will not be enough to prevent the move, the report cited the people as saying.
Bank of Japan officials will also reconsider plans to reduce bond purchases, as they see less need to do so at the current pace, the report's sources said.
The yen performed better after the report, briefly hitting 159.61 against the dollar after floating above 160 earlier in the day, Bloomberg said.
(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)