Japan · Monetary policy ·
Bank of Japan raises policy rate to 1.25%, a 31-year high
The Bank of Japan voted 7–2 on September 18 to raise its policy rate from 1% to 1.25%, the highest level since 1995. Two board members dissented, arguing for a pause in further tightening.
Why it matters
The decision is another step away from Japan's long era of ultra-low rates and may affect the yen, global funding costs and Asian markets. The increase was widely expected, but the yen weakened after the announcement.
Full report
The BOJ announced the 25-basis-point increase at the end of a two-day policy meeting. Reuters reported that the bank sees wholesale inflation as elevated, with business-to-business price pressure spilling into consumer prices and underlying inflation approaching 2%.
The vote was 7–2. Board members Toichiro Asada and Ayano Sato dissented, showing that policymakers remain divided over the pace of additional tightening.
The yen weakened to about 156.91 per U.S. dollar after the decision. Investors focused on the two dissents and the absence of more forceful guidance, which tempered expectations for rapid consecutive increases. Governor Kazuo Ueda's later news conference may provide further direction.
This report is an original summary based on verified sources, not a verbatim reproduction.
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