Moody's Analytics stated in a report that it expects the Bank of Japan to keep interest rates unchanged this week, with a potential increase to around 1% near the middle of the year. The agency noted that conflict in the Middle East heightens the risk of inflation reaccelerating, but the uncertainty stemming from the conflict will likely lead the central bank to maintain its current stance. It added that renewed weakness in the Japanese yen could prompt the Bank of Japan to move forward with an earlier rate hike later this year. However, the agency also indicated that slowing wage growth and sluggish real economic data make it difficult to support an aggressive tightening plan beyond 1%. The Bank of Japan is scheduled to announce its interest rate decision on Thursday.