Bank of Japan Hikes Interest Rate to Highest Level in 31 Years

The Bank of Japan has raised its benchmark interest rate to its highest level in 31 years, from 1.0% to 1.25%. This decision was made to combat inflationary pressures, particularly driven by rising energy costs.

The central bank's policy meeting resulted in a 7-2 vote in favor of the rate hike. The Bank of Japan noted that economic and inflation trends align with its forecasts while warning of risks should core inflation deviate from its 2.0% target.

Despite the rate hike, the Japanese yen slipped to 156.91 against the US dollar as markets await comments from Governor Kazuo Ueda regarding the pace and timing of potential future increases.