BOJ Raises Rates to 31-Year High Amid Dovish Dissent

The Bank of Japan (BOJ) has raised its interest rates to their highest level in 31 years, despite two board members dissenting from the decision. The policy rate was increased to 1.25% by a 7-2 vote at the BOJ's September 18 meeting.

The move follows similar rate hikes by major central banks, including the European Central Bank and the US Federal Reserve, which are fighting persistent inflation pressures driven by soaring oil costs. The BOJ said wholesale inflation remains elevated and price pressures from business-to-business trading have started to spill over into consumer prices.

However, despite the rate hike aligning with market expectations, the yen weakened after the announcement, sliding to around ¥156-157 per dollar as investors interpreted the dissent and lack of hawkish forward guidance as dovish. The BOJ's governor, Kazuo Ueda, is set to hold a press conference later in the day for further clarification on the pace and timing of future rate hikes.