The Bank of Japan (BOJ), the country's central bank, raised its benchmark interest rate Tuesday for the first time in six months at its monetary policy meeting.
According to Kyodo News and other sources, the BOJ decided to raise its short-term policy rate, the benchmark rate, by 0.25 percentage point to "around 1%" from the current "around 0.75%" at the two-day monetary policy meeting that began the previous day. As a result, Japan's benchmark rate reaches its highest level in 31 years since September 1995.
The BOJ ended its negative interest rate policy in March 2024 for the first time in 17 years, then raised the benchmark rate from a range of 0 to 0.1% to "around 0.25%" in July of the same year. It raised the rate to "around 0.5%" in January last year and to "around 0.75%" in December of the same year.
Markets had largely anticipated that the BOJ would raise its policy rate at this meeting. The decision is seen as reflecting a judgment that the risk of rising prices outweighs the possibility of an economic downturn caused by instability in the Middle East.
In the statement released the same day, the BOJ signaled it would maintain its rate-hike stance, saying of future monetary policy that it "will continue to raise the policy rate and adjust the degree of monetary easing in accordance with economic, price, and financial conditions."
