Japan raises interest rate to new 31-year high to curb rising prices — SkimNews
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- Bank of Japan (BOJ) raised its main interest rate from 1% to 1.25% on Friday, reaching the highest level since 1995 in a widely expected move
- BOJ has now hiked rates six times since 2024, when it began from a negative rate of -0.1%, marking a sustained shift away from its long-standing accommodative policy
- Japan's core inflation eased slightly to 1.7% in August from 1.8% in July but remains near the BOJ's 2% target, supporting the case for tighter monetary policy
- Lale Akoner, market analyst at eToro, stated that 'one of the world's last sources of ultra-cheap money is disappearing' as a result of the BOJ's tightening
- U.S. Treasury Secretary Scott Bessent called on BOJ Governor Kazuo Ueda to 'do the right thing' by raising rates to support the yen, following a joint U.S.-Japan currency intervention in August
Why it matters: Japan’s persistent monetary tightening risks accelerating further if the yen remains weak, forcing faster hikes than markets or the government anticipate. With rates now at a 31-year high and inflation close to target, households and borrowers face rising costs just as global central banks maintain pressure on price stability.
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