BOJ Raises Rate to 31-Year High Amid Persistent Inflationary Pressures

The Bank of Japan has raised its benchmark interest rate to a 31-year high of 1.25% as it tries to combat persistent inflationary pressures.

The central bank's decision, announced on September 18, 2026, comes after a two-day monetary policy meeting where the BOJ voted 7-2 in favor of increasing the rate from 1%. Policy Board members Toichiro Asada and Ayano Sato opposed the decision.

The BOJ cited 'wholesale inflation remains elevated' as the main reason for the rate hike, saying that price pressures from business-to-business trading have started to spill over into consumer prices. The central bank also stated that 'underlying inflation has been approaching 2%', as businesses continue passing higher wage and operating costs on to consumers, while inflation expectations rise.