BOJ Hikes Interest Rate to 31-Year High Amid Inflation Concerns

The Bank of Japan (BOJ) has increased its benchmark interest rate to 1.25%, marking the highest level in 31 years, as it attempts to combat inflation.

The 25-basis-point hike was widely expected and brings an end to Japan's long period of ultra-low interest rates. The decision came as Japan faces pressure from higher energy costs, a weak yen, and rising import prices.

The BOJ raised the rate from 1%, with a 7-2 vote in favor of the increase. Two policymakers opposed the move, highlighting differences within the central bank over how quickly monetary policy should tighten.

The latest inflation data showed core consumer inflation eased slightly to 1.7% in August from 1.8% in July, but a measure that excludes both fresh food and fuel rose 1.9%. The BOJ has warned that higher energy costs and a weaker yen could push inflation above its 2% target.