Bank of Japan Raises Key Interest Rate by 0.25%p, Reaching 1% for First Time in 31 Years

The Bank of Japan (BOJ), the country's central bank, raised its key interest rate today for the first time in six months following its Monetary Policy Meeting.

According to reports from Kyodo News and other outlets, the BOJ decided during its two-day meeting, which concluded today, to increase the short-term policy rate from the current "around 0.75%" to "around 1%," marking a 0.25 percentage point hike.

As a result, Japan's key interest rate has reached its highest level in 31 years, since September 1995.

The Bank of Japan began its shift away from ultra-loose policy by ending its negative interest rate policy in March 2024. It subsequently raised the key rate from the 0–0.1% range to "around 0.25%" in July of the same year.

The rate was further increased to "around 0.5%" in January of last year and to "around 0.75%" in December of that year.

Prior to the meeting, market expectations were largely centered on the BOJ raising its policy rate.

Analysts suggest this decision was driven by the judgment that the risks of inflation outweigh the potential for an economic downturn caused by instability in the Middle East.

In a statement released today, the Bank of Japan signaled its intention to continue its trend of rate hikes, stating regarding future monetary policy that it will "continue to raise the policy interest rate and adjust the degree of monetary easing in accordance with economic, price, and financial conditions."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.