Japan's Central Bank Hikes Rates to 1.25% Amid Global Monetary Policy Shift

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

The Bank of Japan had been trying to normalize monetary policy after decades of keeping rates near or below zero to combat deflation and boost borrowing and spending.

Bank of Japan Governor Kazuo Ueda said the decision was made after considering various risks such as the war in Iran, AI market demand, and currency fluctuations.

The US Federal Reserve raised its key rate earlier this week, and analysts expect another increase from the Bank of Japan later this year or early next year.