Japan raises interest rate to new 31-year high to curb rising prices
The Bank of Japan has raised its main interest rate to 1.25%, the highest level in 31 years, as part of a shift away from long-term ultra-low borrowing costs. The move aims to combat inflation and align Japan's monetary policy with other major global economies.
Why it matters
This policy shift signals a major change in Japan's economic strategy, potentially impacting global currency markets and trade.
Image source, Anadolu via Getty Images Image caption, The Bank of Japan has been raising the rate since 2024, when it stood at minus 0.1%
Japan's central bank has raised its main interest rate to a fresh 31-year high as it continues to move away from decades of ultra-low borrowing costs and as the country faces increasing economic pressures.
In a widely expected move on Friday, the Bank of Japan (BOJ) increased the rate from 1% to 1.25% - a level not seen since 1995.
It comes as major central banks around the world are hiking rates as higher energy prices caused by the Iran war are helping to push up inflation.
On Wednesday, the US Federal Reserve raised its benchmark interest rate for the first time in over three years, while the European Central Bank also increased its borrowing costs earlier this month.
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