Bank of Japan Hikes Rate to 1.25% Amid Inflation Concerns

The Bank of Japan has raised its key interest rate to 1.25%, the highest level since 1995, in an effort to combat inflation and stabilize the economy.

The decision was made by seven out of nine members of the central bank's board, with two members voting against the increase. This marks the acceleration of the monetary tightening cycle that began in March 2024, following a previous rate hike three months prior.

The Bank of Japan cited concerns over inflation exceeding its 2% target, as the country's headline inflation rate stood at 1.9% in August. This move was anticipated by economists, with nearly 90% forecasting a 25-basis-point tightening.