The Bank of Japan is considering raising short-term interest rates to around 0.25% from the current 0-0.1% at its two-day policy meeting that ends on Wednesday, Jiji news agency reported.
Public broadcaster NHK also reported that the BOJ would consider raising interest rates, with many board members of the view that inflation is accelerating in line with their forecast.
Citing an unidentified source, NHK said that the board members felt the BOJ must be vigilant regarding risks that the weak yen could push up inflation.
Any such move would follow the central bank's decision in March to end eight years of negative interest rates and bond yield control, and underscore its resolve to move steadily towards phasing out its massive monetary stimulus.
BOJ Governor Kazuo Ueda has said the bank will hike rates further if it becomes convinced that rising wages will prop up services prices, and keep inflation durably around its 2% target.
While many market players expect the BOJ to raise short-term rates this year, they are divided on the exact timing. More than three-quarters of economists polled by Reuters on July 10-18 said they expect the BOJ to stand pat this month.
