Bank of Japan raises key rate to highest since 1995

The Bank of Japan raised the interest rate by 0.25 percentage points, setting the target rate at about 1.25%. The rate was the highest in 31 years. This is reported by the Financial Times (FT).

The decision was made by a majority of votes - seven members of the Governing Council of the Central Bank of Japan voted in favor, two more against. The rate hike was opposed by two council members appointed by Prime Minister Sanae Takaichi.

As the FT notes, the move was caused by a desire to cope with rising inflation and the weakening of the national currency. However, immediately after the announcement, the yen continued to fall, breaking the mark of 157 yen to the dollar. Experts polled by the FT are allowing another interest rate hike before the end of the year.

On the eve of the US Federal Reserve for the first time since 2023 raised the rate by 25 basis points, to 3.75-4% per annum. The European Central Bank made a similar decision last week.