Bank of Japan lifts rate to 1.25%, highest since 1995

 Bank of Japan lifts rate to 1.25%, highest since 1995 The Bank of Japan on Friday raised its benchmark policy rate by 25 basis points to ar...

 Bank of Japan lifts rate to 1.25%, highest since 1995

The Bank of Japan on Friday raised its benchmark policy rate by 25 basis points to around 1.25%, the highest level since April 1995.

The nine-member Policy Board voted 7–2 at the end of a two-day meeting, lifting the uncollateralized overnight call rate from about 1%. Board members Toichiro Asada and Ayano Sato dissented. Asada favored keeping the rate near 1%; Sato said the timing was not right.

It was the BOJ’s first hike in three months  the shortest gap under Governor Kazuo Ueda, who took office in 2023  and a faster pace than the roughly six-month intervals seen earlier in the normalization cycle that began in 2024.

Officials pointed to a gradual economic recovery and the risk that inflation could run above the 2% target, citing energy prices, Middle East tensions, AI-related demand, and the yen. Ueda said the economy was still recovering and that the bank now needed to keep price gains stable around 2%. He did not lock in the date of the next move.

The increase was widely expected. The yen still slipped after the announcement as traders focused on the split vote and uncertainty over how far rates will go. The new target takes effect next Thursday, after Japan’s midweek holidays.

Family Writers Press International