BOJ Raises Benchmark Rate to 1.25% Amid Economic Recovery

Japan's central bank raised its benchmark interest rate to 1.25%, marking the highest level in 31 years, in an effort to normalize monetary policy.

The Bank of Japan has been trying to encourage borrowing and spending by keeping interest rates low for decades, but with inflation near the targeted 2% and a recovering economy, it's time for a change.

Bank of Japan Governor Kazuo Ueda noted that the decision was made after considering various risks, including the war in Iran, expanding demand for artificial intelligence, and currency fluctuations.

The move is seen as a response to pressure from the US Federal Reserve, which raised its key rate earlier this week. The Bank of Japan also intervened with the US to prop up the yen recently.