The Bank of Japan raised its policy rate to 1.25% on 18 September, while the major central banks of Japan, the United States and Europe raised rates that month. This created a historic situation in which rates were raised simultaneously for the first time in half a century, as each country steered policy against a backdrop of inflation risks including higher oil prices and AI demand.
The Bank of Japan raised its policy rate on 18 September, just 3 months after its previous hike, and decided to accelerate the pace of rate increases. At a press conference, Governor Ueda Kazuo (植田和男) indicated that the Bank would seek to maintain inflation near its 2% target while containing upside risks to prices, and acknowledged that the policy environment had changed.
The Bank of Japan’s latest rate increase was an additional hike 3 months after its June increase, a pace described as the fastest under the Bank of Japan. Markets are expected to use incoming data to assess the timing of the next hike.
The Federal Reserve raised its policy rate by 0.25% at the FOMC meeting on 16 September, and reports indicate that many participants expect additional tightening within the year.
The European Central Bank decided to raise rates by 0.25% on 10 September. Reports indicate that expectations of further rate hikes are supported by prolonged price increases and the resilience of economic activity.
The Bank of Japan’s decision to raise rates on 18 September, resulting in the major central banks of Japan, the United States and Europe raising rates in the same month, is regarded as a historic event that had not occurred for approximately half a century, since the Second Oil Crisis.