At its meeting on the 18th, the Bank of Japan decided to raise the policy rate from the current 1.0% to around 1.25%, bringing it to its highest level in 31 years. The hike will take place after a 3-month interval, the shortest since Governor Ueda (植田) took office.
The Bank of Japan decided at its monetary policy meeting to raise the policy rate from 1.0% to around 1.25%. The hike brings the rate to its highest level in 31 years and was implemented after the shortest interval since Governor Ueda Kazuo (植田 和男) took office.
The market expects another rate hike before the end of the year, with the focus on stabilising prices without slowing the economy. The decision is intended to curb inflation and prevent price increases from exceeding expectations amid higher crude oil prices and a weaker yen.
The hike may also have been influenced by developments in monetary policy in the United States and Europe, and the yen exchange rate has moved sharply since the start of the year. The BOJ's shift toward higher rates also carries the risk of further accelerating the yen's downward trend.
Bank deposit rates are expected to rise following the hike, and the increase could spread to corporate lending and variable-rate mortgages, potentially contributing to an economic slowdown.