In a quarterly ‌outlook report due at next week's policy meeting, the BOJ is expected to highlight lingering inflation risks stemming from the Middle East conflict, robust global ‌AI demand and rising import costs from a weak yen. After sounding that alarm in April, the BOJ pushed its ⁠policy rate to a 31-year high of 1% in June. With risks of an immediate, oil-driven inflation shock easing, policymakers are now turning their attention to the extent to which firms continue to pass rising costs on to households, the sources said. Analysts polled by Reuters expect the BOJ to raise rates to 1.25% anytime between October and December. But analysts expect core inflation to climb back above 2% later this year, as the recent surge in producer prices filters through to the broader economy.