The Bank of Japan voted by majority at its monetary policy meeting to raise its target for the short-term interest rate from around 1.0% to around 1.25%. The new policy rate marks the first rate hike in 3 months since the policy meeting in June this year, and will take effect on 24 September.
At its monetary policy meeting on the 18th, the Bank of Japan decided to raise its target for the policy rate from around 1.0% to around 1.25%. The decision was approved by a majority vote and will take effect on the 24th of this month.
The new rate will be at its highest level in 31 years since 1995, marking the first hike in 3 months since the June policy meeting. Markets are focused on the pace of future rate hikes. The Bank of Japan judged that a policy response was needed to contain inflation.
Seven of the governor, deputy governors and 9 Policy Board members voted in favor of the decision, while Asada Toichiro (浅田統一郎) and Sato Ayano (佐藤綾野) voted against it. The Bank of Japan noted that the Corporate Goods Price Index rose 7.6% year on year in August and expects higher upstream transaction prices to accelerate increases in downstream consumer prices.