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Japan Bank of Japan hikes rates to 31-year high
The Bank of Japan raised its benchmark interest rate by 25 basis points to 1.25%, marking its highest level since 1995. This move aligns with market expectations and aims to mitigate the risks of the targeted 2% inflation. The decision was made by a majority of 7 votes to 2 after a two-day meeting, amid ongoing inflationary pressures resulting from rising import and energy costs, as well as a weakening yen. This increase is a significant step away from the low-interest rate policies the bank has maintained for years, with expectations of continued monetary tightening if inflation and wage pressures persist. However, the bank also indicated that core inflation is approaching its target and that fiscal policies remain flexible.
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