▲ Bank of Japan
The Bank of Japan raised its benchmark interest rate by 0.25 percentage points to 1.25% today (September 18).
This additional rate hike comes three months after the rate was raised from 0.75% to 1% last June, appearing to signal an acceleration in the pace of rate increases compared to the previous pattern of roughly once every half-year since March 2024.
A benchmark interest rate of 1.25% marks the highest level in 31 years since 1995.
Even before the announcement of the decision today, financial markets widely anticipated that the Bank of Japan would raise its policy rate at this meeting.
Amid rising imported energy and food prices driven by higher crude oil prices and a weak yen, observations emerged that the Bank of Japan is remaining vigilant against inflation exceeding expectations.
Some analyses also suggest that U.S.-Japan consultations influenced the decision.
In July, the U.S. and Japanese governments jointly intervened in the foreign exchange market to reverse the depreciation of the yen, which had approached nearly 164 yen per dollar.
Later, U.S. Treasury Secretary Scott Bessent held talks with Bank of Japan Governor Kazuo Ueda, stating, "strongly support Japan taking decisive monetary policy measures," and urged a rate hike.
However, as the U.S. also raised its benchmark interest rate by the same 0.25 percentage points, and factors causing the weak yen such as high oil prices and trade deficits remain in place, some forecast that it will be difficult to immediately reverse the depreciation of the yen.
Weight is being lent to projections that the future direction of the yen will depend more on the pace of rate hikes by both the U.S. and Japan moving forward than on this month's rate decision.
(Photo: Yonhap News)
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