BOJ Hikes Interest Rate to Combat Inflation Risks

The Bank of Japan (BOJ) has raised its key policy rate to 1.25% in an effort to combat growing inflation risks, marking the shortest interval between rate hikes since March 2024.

The BOJ's decision, made at a two-day policy meeting, puts borrowing costs at their highest level in 31 years and follows on from a similar move in June.

The bank cited higher oil prices and a weaker yen as the primary drivers of inflation, with officials warning that they will continue to monitor developments in the foreign exchange market and the impact of artificial intelligence-linked demand on monetary policy.