Bank of Japan Hikes Rate to 1.25%, Largest Increase in 31 Years

The Bank of Japan (BOJ) raised its policy interest rate to 1.25% on Friday, marking a 31-year high in an effort to mitigate inflation risk.

The decision, which was widely anticipated by markets, aims to prevent inflation from exceeding the central bank's 2% target, according to Reuters.

Kento Minami, senior economist at Daiwa Securities in Tokyo, described the overall impression of the statement as dovish, noting that the new board members, Ayano Sato and Toichiro Asada, dissented from the decision.

Minami said the statement indicated the central bank would raise rates at least once every six months, in line with market expectations of a raise every three months.