BOJ lifts key policy rate to 1.25% amid growing inflation risks
TOKYO (Kyodo) -- The Bank of Japan raised its key interest rate to 1.25 percent from around 1.0 percent on Friday, accelerating monetary tightening as
On Friday, the Bank of Japan (BOJ) increased its key interest rate to 1.25% from 1.0%, marking the highest level in 31 years and the shortest interval between rate hikes since March 2024. The policy adjustment aims to curb inflation driven by higher oil prices and a weaker yen. BOJ Governor Kazuo Ueda affirmed that the country's monetary conditions remain accommodative, with the bank planning to continue raising rates and adjusting monetary accommodation based on economic and price developments.
The BOJ also warned of the risk of inflation overshooting its 2% target and will closely monitor foreign exchange markets and global AI-linked demand. The recent rate hike, expected and welcomed by many, may hinder economic growth by increasing borrowing costs for businesses and households. However, it could also help control inflation by strengthening the yen.
The BOJ now faces the challenge of controlling inflation without significantly slowing economic growth, amid concerns over the yen's weakness and pressure from the U.S. over excessive yen depreciation.
Written by urgent.news from The Mainichi's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
