The Bank of Japan will raise interest rates next week for the first time in nearly six years in a sign that the Japanese economy is gaining momentum, news reports say.

With Japan expected to shake off deflation, the central bank has judged that all conditions have been met for a rate hike, the Asahi Shimbun said, without citing sources.

Governor Toshihiko Fukui will propose a rate hike during a two-day policy meeting Thursday-Friday, with a majority of the board members expected to agree, the Mainishi Shimbun said, without citing sources.

The central bank will initially raise the short-term rate to around 0.25 percent, the first rate hike since August 2000 which ends Japan's zero-interest rate policy, the Mainichi and Asahi said.

The reports agreed with analysts' expectations as the Japanese economy enjoys continued improvement.

Government ministers were initially cautious on an early rate hike, saying that the Japanese recovery was still fragile, but have recently toned down their opposition, maintaining that the decision was up to the central bank.

So far this year, the Bank of Japan has steadily taken steps toward the expected rate hike.

In March, it ended its five-year policy of "quantitative easing," under which it flooded the banking system with excess funds to offer easy credit and stimulate the economy.

The bank decided at the time to keep interest rates at zero but indicated that it would end this policy when Japan definitively breaks out from more than a decade in the economic doldrums.

Speculation has mounted that the central bank might delay the rate hike because governor Fukui has been has been embroiled in a personal investment scandal.

But the central bank has said the scandal will not affect its rate decision.

Fukui admitted to profiting while in office from an investment in a scandal-tainted fund operated by Yoshiaki Murakami, who has been indicted for alleged insider trading.

Fukui has not broken any laws nor the central bank's own internal rules, but he has taken flack for the timing of his decision in February to pull out his investment -- just before the BoJ ended its ultra-loose monetary policy.

Opposition lawmakers have called for his resignation.

Source: China Daily