BOJ Raises Interest Rate to 31-Year High Amid Inflation Fears

The Bank of Japan (BOJ) has raised its policy interest rate to a 31-year high of 1.25% from 1%. The new rates take effect on September 24, 2026, after a 7-2 majority vote by the BOJ's monetary policy meeting.

According to the BOJ, Japan's economy has recovered moderately, but some weakness has emerged due to the impact of the situation in the Middle East. The central bank expects the economy to continue growing moderately, supported by government measures and accommodative financial conditions.

The BOJ also raised the interest rate on its complementary deposit facility to 1.25% and the basic loan rate to 1.5%, both effective September 24. Additionally, the BOJ decided unanimously to change the loan rate for its Funds-Supplying Operations to Support Financing for Climate Change Responses to a floating rate and introduce upper limits on loan amounts.