The Bank of Japan raised its policy rate to around 1.25% at its policy meeting on the 18th, bringing it to its highest level in 31 years. It has raised rates 6 times over the past 2 and a half years and maintained its policy of raising rates amid continuing inflationary pressure.
The Bank of Japan decided at its monetary policy meeting on the 18th to raise its policy rate from minus 0.1% to around 1.25%. This will bring the rate to its highest level in 31 years, or since 1995.
The Bank of Japan has raised rates a total of 6 times over the past 2 and a half years, and has been aiming for a level comparable to those of other major economies. Around the time of the meeting, central banks around the world were also raising rates against a backdrop of rising energy prices.
Japan's economy faces challenges including a weaker yen, rising prices and a declining working-age population. The nationwide consumer price index rose 1.7% year on year in August, while the all-items index excluding fresh food stood at 102.0, and prices remain below the Bank of Japan's 2% price stability target.
Uncertainty over energy supplies and pressure from a weaker yen are also factors, along with coordinated intervention by Japan and the United States and higher oil prices resulting from the situation in the Middle East.