Japan Hikes Interest Rate to 1.25% Amid Inflation Concerns

Japan's central bank has raised its benchmark interest rate to 1.25%, marking the highest level in 31 years.

The Bank of Japan, led by Governor Kazuo Ueda, increased the uncollateralized overnight call rate as part of efforts to normalize monetary policy after decades of near-zero rates.

This move follows the U.S. Federal Reserve's recent rate hike and comes amid concerns about inflation, currency fluctuations, and the weakening yen.

Analysts believe another increase is possible later this year or early next year, but Governor Ueda cautioned that more time is needed to monitor wage growth and other risk factors before making further decisions.