BoJ Hikes Rate to 31-Year High

2026-09-18 03:03 By Farida Husna 1 min. read

The Bank of Japan lifted its key short-term rate by 25bps to 1.25% in a 7-2 vote at its September meeting, marking the highest level since April 1995 and in line with market expectations.

The hike, the first in three months, reflected persistent inflationary pressures, including those stemming from higher oil prices, and marked another step away from decades of ultra-low rates.

Policymakers said they would continue to raise the policy rate and adjust monetary accommodation in response to economic activity, prices and financial conditions, while considering the timing and pace of further adjustments.

Core CPI inflation has been rising moderately as higher business-to-business prices spill over into consumer prices and firms pass higher wages on to selling prices.

Upside risks of inflation exceeding the 2% target remain, with the board adding that it would closely monitor the impact of the Middle East conflict.

The dissenting votes came from board members Toichiro Asada and Ayano Sato.



News Stream
BoJ Hikes Rate to 31-Year High
The Bank of Japan lifted its key short-term rate by 25bps to 1.25% in a 7-2 vote at its September meeting, marking the highest level since April 1995 and in line with market expectations. The hike, the first in three months, reflected persistent inflationary pressures, including those stemming from higher oil prices, and marked another step away from decades of ultra-low rates. Policymakers said they would continue to raise the policy rate and adjust monetary accommodation in response to economic activity, prices and financial conditions, while considering the timing and pace of further adjustments. Core CPI inflation has been rising moderately as higher business-to-business prices spill over into consumer prices and firms pass higher wages on to selling prices. Upside risks of inflation exceeding the 2% target remain, with the board adding that it would closely monitor the impact of the Middle East conflict. The dissenting votes came from board members Toichiro Asada and Ayano Sato.
2026-09-18
BoJ Eyes Further Rate Hikes Amid Persistent Cost Pressures
Bank of Japan board member Kazuyuki Masu said the central bank will continue raising its policy rate and adjust monetary accommodation as underlying inflation nears 2%. Speaking in Fukui on Thursday, he noted the pace of hikes will hinge on progress toward the July baseline scenario and risks from crude oil, AI-driven demand and FX moves. Masu warned that higher fuel and chemical costs tied to the Iran situation could prove more than temporary by lifting distribution and other expenses. Food prices also face pressure from rising domestic logistics, shipping fees and imported fertilizer, raising concern over persistent inflation. He added that recent rate hikes have not curbed firms’ funding demand, which has instead grown, though risks of overheating in corporate investment remain. Households overall hold net asset surpluses, but younger borrowers face heavier housing-loan burdens despite stronger wage growth.
2026-09-10
BoJ Takata Urges Nimble Approach to Rate Hikes
Bank of Japan (BoJ) board member Hajime Takata urged a flexible, data-dependent approach to rate hikes, warning that inflation is edging closer to the 2% target and risks of overheating are rising. Addressing business leaders in Hokkaido, he described 2026 as a “regime change,” with policy no longer tied to a fixed pace but adjusting to domestic and global conditions. Takata, among the central bank’s more hawkish voices, had proposed lifting the benchmark rate to 1.25% at the July meeting, but the idea was rejected in an 8-1 vote, leaving the rate at 1%. Meanwhile, Governor Kazuo Ueda stressed that policymakers will continue raising rates as financial conditions remain accommodative, while weighing inflation risks against the cumulative impact of past moves. He said the board will scrutinise whether economic and price trends stay aligned with its baseline outlook and debate the risks at its next policy meeting.
2026-09-02