BOJ Raises Rates to 31-Year High Amid AI-Driven Inflation Risks

The Bank of Japan (BOJ) has raised its benchmark interest rate to 1.25%, the highest level since 1995, in an effort to combat economic strain and normalize borrowing costs.

This move marks the first rate hike since June and brings the BOJ closer to neutral rates, following pressure from the US to raise interest rates sooner.

The increase was approved by a majority of seven board members, with two opposing it. Despite this, investors were more concerned about the dissenting votes and the Bank's cautious policy guidance, causing the yen to fall almost 0.8% against the dollar.