Bank of Japan Hikes Interest Rate to 1.25% Amid Rising Inflation Concerns

The Bank of Japan has raised its benchmark interest rate by 0.25 percentage points to 1.25%, marking the highest level in 31 years since 1995.

This decision comes just three months after a previous hike from 0.75% to 1% last June, signaling an accelerated pace of rate increases compared to the previous pattern of roughly once every half-year since March 2024.

The move is seen as a response to rising imported energy and food prices driven by higher crude oil prices and a weak yen, with observers noting that the Bank of Japan remains vigilant against inflation exceeding expectations.