BOJ Raises Rates to 1.25% Amid Inflation Worries
The Bank of Japan (BOJ) has raised its policy rate to 1.25%, marking its highest level in about 31 years, since April 1995.
This decision was made at the BOJ's monetary policy meeting on August 18th and passed by a 7-2 majority, with Policy Board members Toichiro Asada and Ayano Sato casting dissenting votes.
The rate hike comes just three months after the June meeting and is in line with market expectations. The BOJ has been gradually increasing rates since ending negative interest rates in March 2024, but this latest hike marks the shortest interval yet.
The main driver behind the decision is the increasing upside inflation risks due to higher crude oil prices and yen weakness. Crude oil prices have resumed their upward trend, with U.S. crude futures trading near $100 per barrel for the first time in about four months.