Bank of Japan raises rates to 1.25%, 31-year high — SkimNews
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- Bank of Japan voted to raise its target interest rate from 1% to 1.25%, the highest level since 1995, aiming to curb inflation linked to the Iran war
- Bank of England held UK rates steady at 3.75% on Thursday but warned they could soon rise amid fallout from the conflict in the Middle East
- Bank of Japan's vote was not unanimous, with two board members dissenting — a signal HSBC's Fred Neumann said leaves doubts about further tightening
- TD Securities strategist Prashant Newnaha expects the next 25 basis point hike in December rather than a back-to-back move in October, citing no 'smoking gun' for accelerating
- The yen weakened about 0.7% against the dollar on Friday despite the hike, while the Nikkei stock index rose nearly 2% and two-year Japanese bond yields fell four basis points to 1.82%
- Brent crude dropped as much as 1.5% to $103.29 a barrel on hopes of alternative Middle East oil supply routes, even as concerns about Houthi-Saudi strikes lingered
Why it matters: The BoJ is now tightening in lockstep with the Fed and ECB, yet the yen still weakened 0.7% on the day — a sign the rate hike was insufficient to reverse the currency's slide and may invite further currency intervention by Japanese policymakers.
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