BoJ Hikes Rates to 31-Year High Amid Inflation Fears

The Bank of Japan (BoJ) raised interest rates by 25 basis points to a 31-year high on September 18, 2026. The hike brought the rate to 1.25%. This move was expected by markets following recent tightening by the European Central Bank and the U.S. Federal Reserve.

The decision was not unanimous, with a 7-2 majority vote in favor of the increase. Two members dissented, arguing that the move had come too soon. Despite this, the BoJ signaled that it will continue to raise rates to counter inflation fueled by surging energy prices and a weak yen.

Japan's underlying CPI inflation has been approaching 2%, and the bank cited financial conditions as accommodative in its decision to hike rates further. Central bankers are keeping tabs on movements in the yen, which fell to a 40-year low against the dollar in July.