BOJ Raises Interest Rate to 31-Year High Amid Rising Inflation and Weak Yen
The Bank of Japan (BOJ) raised its interest rate to 1.25% in its latest move, marking the highest level since 1995. The central bank's decision was widely expected by economists and analysts, with a 90% chance predicted for a 25-basis-point hike.
The BOJ cited rising inflation in Japan as the reason for the rate increase, which also aims to counteract the historically weak yen currency. Japan's inflation rate has been at an annualized 1.9% in August, and the central bank is concerned that it may exceed its 2% target.
The BOJ's decision comes days after the US Federal Reserve raised its key interest rate by 25 basis points to combat inflation. Fed Chair Kevin Warsh has been vocal about Japan continuing its rate-hiking cycle to strengthen the yen and Japanese economy, with US Treasury Secretary Scott Bessent recently calling on Japan to take 'decisive market and monetary steps'.