BOJ Raises Interest Rates to 1.25% Amid Energy Crisis

The Bank of Japan (BOJ) has increased its interest rate to 1.25% in response to rising energy costs caused by the war in Iran.

This move, announced on Friday, is the BOJ's sixth increase since tightening began in March 2024 and marks the highest level since 1995.

The decision was made with a 7-2 vote, with members Toichiro Asada and Ayano Sato dissenting. The market had largely priced in the move before the meeting ended.

The BOJ is not alone in raising interest rates; the Federal Reserve (Fed) raised its target range to 3.75%-4.00% on Wednesday, while the European Central Bank (ECB) increased its deposit rate to 2.50% a week earlier.