Bank of Japan Raises Interest Rates to 31-Year High Amid Inflation Concerns
The Bank of Japan (BOJ) raised its policy rate by 25 basis points to 1.25%, the highest level since 1995, accelerating its monetary tightening cycle started in March 2024. The decision was supported by seven members on a split vote and followed expectations from nearly 90% of surveyed economists. The BOJ cited risks that inflation could exceed its 2% target amid rising domestic prices and a historically weak yen. The move comes as Japan faces an August headline inflation rate of 1.9%, with Tokyo and Washington recently intervening to stabilize the yen, which weakened slightly after the announcement. U.S. officials have encouraged continued monetary tightening in Japan despite Prime Minister Sanae Takaichi's preference for easier policy. The stronger yen may help reduce energy import costs as Japan shifts toward more expensive U.S. oil.
Topics: Bank of Japan G20 inflation interest rates yen