BOJ Hikes Rates Amid Growing Inflation Risks
The Bank of Japan (BOJ) raised interest rates as expected on Friday, citing growing inflationary risks. The central bank hiked its rate to 1.25%, bringing it to its highest level since 1995. This is the second hike this year, and seven out of nine members of the BOJ's rate-setting board voted in favor.
The BOJ cited concerns that Japan's inflation was getting close to its 2% annual target. The central bank warned that soaring inflation had started to spill over into underlying inflation, which is nearing the 2% target. It expects core CPI to accelerate past 2% in the second half of fiscal 2026 due to high oil prices and AI-driven demand.
The BOJ's decision comes amid growing anxiety over energy and AI-driven inflation globally. The European Central Bank and Federal Reserve have also raised interest rates recently. Japanese stocks extended gains after the BOJ decision, while the yen weakened slightly.