The Bank of Japan raised its policy rate from 1.0% to 1.25% at its monetary policy meeting, bringing it to a 31-year high. The BOJ indicated that it intends to continue raising rates and explained that it is placing greater emphasis on the risk of rising prices.
At its monetary policy meeting on the 18th, the Bank of Japan decided to raise its policy rate from around 1.0% to around 1.25%. This brought the rate to its highest level in 31 years, with the three-month interval since the previous increase in June being the shortest since the governor took office. The BOJ indicated that it intends to continue raising rates.
At a press conference, Governor Ueda Kazuo (植田和男) explained that the risk of inflation exceeding the 2% target was increasing, saying that “the situation has changed.” 2 members voted against the decision, but the policy of continuing with rate hikes was broadly shared.
The aim of the rate hike is to curb excessive price increases caused by soaring crude oil prices and a weaker yen, but some also believe it could weigh on the economy by increasing interest costs for companies and households. In the market, the yen weakened, at one point reaching the ¥157 range.
Central banks in Europe and the United States decided to raise rates in September, and views on additional rate hikes by the BOJ are mixed as the global economy shifts toward a rate-hiking phase.
In light of the above, attention is focused on the BOJ’s future rate-hike policy and the market’s reaction.