BOJ Raises Interest Rate to 31-Year High Amid Global Economic Pressures

The Bank of Japan has increased its main interest rate to 1.25% from 1%, marking a new 31-year high. This move comes as major central banks around the world are hiking rates due to rising energy prices caused by the Iran war, which is driving up inflation.

The BOJ has been raising the rate since 2024, when it stood at minus 0.1%. It has now hiked rates six times in the last two and a half years, as the bank attempts to reach a level similar to other major economies.

Japan is facing several economic challenges, including a persistently weak yen, rising prices, and a shrinking workforce. Official figures published on Friday showed that inflation eased slightly last month, falling to 1.7% in August from 1.8% the previous month, but remains close to the bank's 2% target level.