BOJ Hikes Rates to 31-Year High Amid Global Inflation Pressures

The Bank of Japan (BOJ) has raised its interest rates to a 31-year high, signaling more hikes ahead. In a 7-2 vote, the BOJ increased its policy rate to 1.25% from 1%, with dovish board members Toichiro Asada and Ayano Sato dissenting.

The move follows similar actions by European and US central banks, which have raised rates in response to global inflation pressures caused by soaring oil costs and expansionary fiscal policies.

BOJ Governor Kazuo Ueda emphasized the importance of stabilizing underlying inflation at 2%, citing risks of it overshooting this target. The BOJ has been gradually increasing interest rates since 2024, with this latest hike bringing the rate closer to Japan's nominal neutral rate of 1.1% to 2.5%.