The Bank of Japan is likely to raise its policy rate by 25 basis points from 1% to 1.25% at its September 17-18 meeting, according to Takuji Aida, an economic adviser to Prime Minister Sanae Takaichi. Aida said another increase could follow by January next year, reinforcing his earlier forecast for a sequence of rate rises through January 2027. Japan's 10-year government bond yield steadied around 2.91% on Monday after two days of declines as expectations of a near-term BOJ move strengthened. The comments indicate broader recognition within Takaichi's previously dovish administration that tighter policy may be needed to limit excessive yen weakness and inflation pressures. Bond yields have also risen amid concern that expansionary fiscal policy could increase government spending, while an unusual management meeting at the $2 trillion Government Pension Investment Fund has prompted speculation over a higher target allocation to domestic bonds.