BOJ Raises Rates Again Amid Inflation Concerns

The Bank of Japan (BOJ) raised its policy rate from 1.00% to 1.25% at its September 17-18 Monetary Policy Meeting, in line with expectations.

This marks the second consecutive rate hike, and the BOJ's rationale for further tightening has shifted from focusing on the neutral rate to addressing the risk of underlying inflation overshooting its 2% target.

Financial markets reacted relatively calmly to the news, with Japan's 10-year government bond yield rising only modestly from 2.94% to 2.97%, and the yen depreciating slightly against the dollar.

The BOJ signaled its intention to continue raising rates going forward, but financial markets are now focused on the pace of future rate hikes rather than whether they will happen.