BOJ Sets Record High Interest Rate Amid Inflation Concerns
The Bank of Japan (BOJ) has raised its benchmark interest rate to 1.25%, marking the highest level in 31 years since 1995. This move comes just three months after a previous hike, where the short-term policy rate was increased from around 0.75% to around 1%. The latest increase is the result of a two-day monetary policy meeting that ended on the 18th.
The BOJ's decision to raise interest rates at this pace is the fastest since current Governor Kazuo Ueda took office. Seven out of nine Policy Board members supported the hike, while two members, Commissioner Asada Doichiro and Commissioner Sato Ayano, opposed it.
The Bank of Japan warned about rising price pressures in its decision statement, citing higher oil prices, a weaker yen, and domestic corporations' prices showing strong year-over-year gains due to increased demand related to artificial intelligence (AI). The BOJ stated that it will continue to raise the policy rate and adjust the degree of monetary easing going forward, depending on economic, price, and financial conditions.