At its meeting on the 18th, the Bank of Japan decided by a majority vote to raise the policy rate from around 1.0% to around 1.25%. Although the decision was approved by a majority, 2 Policy Board members dissented.
At its Monetary Policy Meeting on the 18th, the Bank of Japan decided to raise the policy rate from around 1.0% to around 1.25%. The 1.25% policy rate is now at its highest level in approximately 31 years. This was the first rate hike in two meetings since the previous meeting in June, making the pace faster than the market had expected.
The BOJ believes that turmoil in the Middle East, which has driven up oil prices, and rising demand related to AI are intensifying inflationary pressures. It is also stepping up its vigilance over the yen's weakening trend as a factor pushing up import costs.
The purpose of the rate hike is to signal a stance of containing inflation by restraining demand. Governor Kazuo Ueda (植田 和男) is scheduled to explain the reasons for the decision at a press conference. Attention is also focused on the BOJ's thinking and approach regarding further rate hikes.
Through this decision, the BOJ signaled its intention to continue discussing further rate hikes, and market attention is turning to developments surrounding the next meeting and beyond.