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Japan follows US in raising interest rates
The Bank of Japan (BoJ) voted to raise its target interest rate from 1% to 1.25%, the highest level since 1995, The Guardian reported.
The move meant the BoJ joined the US Federal Reserve and the European Central Bank in tightening monetary policy this month, as central banks attempt to curb the impact of rising prices, linked to the conflict in the Middle East.
The Bank of England on Thursday voted to leave UK interest rates on hold at 3.75% but warned they could soon rise amid the fallout from the Iran war.
The BoJ policy committee’s vote to raise rates was not unanimous — with two of the nine board members dissenting against the increase.
Kazuo Ueda, the governor of the BoJ, would not rule out the possibility of back-to-back rate rises by the bank’s policy committee.
“That depends on how price conditions develop,” he said. “There could be various possibilities. We shouldn’t rule anything out. We’re at a phase where we need to look at various data carefully. But that doesn’t mean we can move slowly. We will analyse data carefully and take timely action as needed.”
The BoJ’s policy committee meets eight times a year, roughly once every six weeks, and Ueda said there is no set plan for the timing of any future potential increases in the rate.
“As for the pace of future rate hikes, we don’t have any pre-set idea in mind such as once every three months,” he said. “We will determine at each policy meeting how best to ensure underlying inflation stabilises at 2%.”
The BoJ has been raising rates since 2024, when it lifted its base rate out of negative territory. It has been under pressure to raise borrowing costs as the yen weakened steadily against the dollar this year. The Japanese currency weakened more than 1% against the dollar late last week.