The BOJ raised its policy rate by 0.25 percentage points to 1.25% at its Monetary Policy Meeting. 2 Policy Board members voted against the decision.
The Bank of Japan decided at its Monetary Policy Meeting held on the 18th to raise its policy rate by 0.25 percentage points to 1.25%. This marks an acceleration in the pace of rate hikes, which had generally been about once every six months since March 2024. The stated aim was to contain upside risks to inflation.
The decision was approved by a majority of the 9 Policy Board members, and 1.25% is the highest level since 1995. Governor Ueda Kazuo (植田和男) was scheduled to hold a press conference at 3:30 p.m. to explain the decision. The response to inflation risks stemming from higher crude oil prices and yen depreciation was cited as a key point of focus.
Policy Board members Asada Toichiro (浅田統一郎) and Sato Ayano (佐藤綾野) cast the 2 dissenting votes on the rate hike. They expressed the view that it was questionable whether a rate hike was appropriate while CPI inflation remained below 2%.
In a statement, the BOJ cited escalating tensions in the Middle East, expanding demand for AI and the yen's depreciation as 3 risk factors for its inflation outlook, and said it would carefully assess the timing and pace of any further rate hikes.