BOJ Hikes Key Interest Rate to 1.25 Pc Amid Inflation Worries

The Bank of Japan (BOJ) raised its key interest rate by 25 basis points to 1.25 per cent from 1.0 per cent earlier, as it warned that underlying inflation could exceed its 2 per cent target amid rising wage and price expectations.

The decision was made at the BOJ's Monetary Policy Meeting, where the policy board approved the rate increase by a 7-2 majority vote.

The central bank also flagged risks from developments in the Middle East, rising AI-related demand, and movements in foreign exchange rates, which could affect Japan's economic activity and prices.