BOJ Hikes Rate to 1.25%, Highest Since 1995, Amid Inflation Concerns

The Bank of Japan raised its benchmark interest rate to 1.25% on September 18, marking the highest level since 1995.

The decision was made after a 7-2 vote, with Board members Toichiro Asada and Ayano Sato opposing the increase.

This move signals that policymakers are becoming more willing to act faster in response to inflation risks posed by higher energy costs and a weak yen.

The BOJ increased its short-term policy rate by 25 basis points, up from 1%, in an effort to prevent temporary cost pressures from becoming embedded in the economy.