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The Bank of Japan (BOJ) on Friday raised its key policy interest rate to around 0.75 per cent, marking a 30-year high, as it moves to rein in persistent inflation pressures fuelled by a weak yen, according to Kyodo News.
The increase, up from approximately 0.50 percent, represents the central bank’s first rate hike since January and comes amid expectations that strong wage growth momentum will continue into next year. The decision also marks the first policy rate adjustment under the government of Prime Minister Sanae Takaichi.
All nine members of the BOJ’s Policy Board voted unanimously in favour of the rate increase at the conclusion of the bank’s two-day policy meeting.
In its post-meeting statement, the BOJ said the likelihood of achieving its baseline inflation outlook has been rising, a key condition for further policy tightening.
Japan’s core consumer prices have remained at or above the central bank’s 2 per cent inflation target for more than three and a half years, underscoring the persistence of inflationary pressures.
The BOJ said it judged it “appropriate” to adjust the degree of monetary accommodation to meet its inflation objective, adding that it will continue to raise its policy rate depending on economic and price developments, noting that monetary conditions remain accommodative despite the latest increase.
