BOJ Raises Interest Rates to 31-Year High in Wide-Ranging Decision

The Bank of Japan raised interest rates to 1.25 percent from 1 percent by a 7-2 vote, marking its highest level in 31 years.

The decision was widely expected and follows rate hikes by other major central banks to combat inflation pressures driven by soaring oil costs.

However, the move failed to prop up the yen, which fell as investors focused on a lack of explicitly hawkish guidance from the BOJ and two dovish dissenters who argued for patience in pushing up borrowing costs.

The BOJ said that while economic and price developments are moving in line with its baseline forecast, there is a risk of underlying inflation deviating from its 2 percent target.