BOJ Hikes Rates to Highest Level Since 1995 Amid Global Interest Rate Cycle

The Bank of Japan (BOJ) has increased its policy rate by 25 basis points to 1.25%, marking the highest level since 1995. This move aims to combat elevated inflation, which continues to impact the economy.

The decision was made after a board meeting where the vote passed 7-2, with members Toichiro Asada and Ayano Sato dissenting. Both Asada and Sato are seen as reflationists, appointed earlier this year by Prime Minister Sanae Takaichi.

This rate hike is part of a broader global cycle of rising interest rates, and it was widely anticipated by markets. The BOJ began normalizing monetary policy in March 2024, with the latest increase coming just three months after June's hike.