BOJ Hikes Rates to Highest Level in 31 Years Amid Inflation Concerns

The Bank of Japan has raised its key interest rate to 1.25% from 1.0%, marking the highest level in 31 years. The decision was made at a two-day policy meeting and had been widely anticipated, although two members of the Policy Board opposed the rate increase.

The latest move represents the shortest interval between rate increases since the current tightening cycle began in March 2024. With only three months having passed since the previous hike in June, the BOJ is showing its commitment to containing inflation driven by higher oil prices and a weaker yen.

The central bank said it will continue to raise the policy interest rate and adjust the degree of monetary accommodation in response to economic developments and financial conditions. While warning of the risk that inflation could exceed its 2% target, the BOJ emphasized its focus on controlling inflation without putting excessive pressure on economic growth.