Japan’s interest rate hiked to 31-year high at 1.25% as inflation rises

TOKYO (AP) — Japan’s central bank on Friday raised the benchmark interest rate to 1.25% from 1.0%, a 31-year-high.The Bank of Japan has been trying to normalize monetary policy after decades of keeping interest rates near or below zero to try to encourage more borrowing and spending to counter deflation and pull Japan's economy out of the doldrums. Inflationary pressures are rising because of the war in Iran, which has sent oil prices soaring in recent months. That is a big negative for resource-poor Japan, which virtually imports all its oil.The rate increase, coming at the end of the two-day monetary policy board meeting, was expected, widely figured into recent global markets.The raise comes after the U.S.

Federal Reserve also raised its key rate this week. It raised its benchmark interest rate Wednesday for the first time since 2023 in an effort to quell stubbornly high inflation.The U.S. has also been pressuring Japan to raise rates because of concerns about the weakening yen.

Analysts say the Bank of Japan could raise interest rates another time later this year, or possibly early next year.The nations intervened together recently to prop up the yen. dollar is trading at about 155 yen. It reached above 160 yen earlier this year.The Bank of Japan has set a target inflation rate of about 2%.

Inflation is about that now in Japan, although some consumers complain that the recent surge in prices is too much, especially in gas and oil-related products.Tokyo's benchmark Nikkei 225 rose after the Bank of Japan decision was announced.___Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama Japan's central bank raises benchmark interest rate to 1.25% The Bank of Japan said it would raise interest rates further as it seeks to counter inflation fuelled by surging energy prices and a weak yen.

(EPA Images pic)TOKYO: The Bank of Japan raised interest rates to a more than 30-year high of 1.25% on Friday and said it would lift further as it looks to counter inflation fuelled by surging energy prices and a weak yen.The hike was expected by the markets following the recent tightening by the European Central Bank and the US Federal Reserve.The central bank's decision to raise its key rate by 25 basis points was carried by a 7-2 majority vote, the BOJ said on its website.Pressure has increased on officials to lift borrowing costs as a spike in oil prices caused by the Middle East crisis, which shows little sign of ending anytime soon, is expected to keep putting upward pressure on inflation.Central bankers are also minded to support the yen, which fell in July to its weakest level against the dollar in 40 years, prompting a historic joint intervention in foreign exchange markets by the United States and Japan."As for the future conduct of monetary policy, given that underlying CPI inflation has been approaching two percent and financial conditions have been accommodative, the bank will continue to raise the policy interest rate," the BOJ said. Bank of Japan raises benchmark interest rate from 1 to 1.25 percent, pledging to help counter inflation risks.