BOJ Lifts Rate To 17-Year High Of 0.5%

The Bank of Japan (BOJ) has raised its policy interest rate to 0.5% from 0.25%, marking its highest level in approximately 17 years, amid expectations of wage hikes in this year’s annual labor-management negotiations, Mainichi Japan reported.

The rate hike was decided by an 8-to-1 vote at the BOJ's Policy Board meeting. I Photo: Asturio Cantabrio Wikimedia Commons

The BOJ stated that it would continue to raise the key short-term rate if the economy and prices align with its projections.

The central bank also increased its forecasts for the core consumer price index (CPI), excluding volatile fresh food, for the three years through fiscal 2026 in its latest outlook. This adjustment reflects a recent surge in rice prices and a weaker yen, which has driven up import costs.

The BOJ now predicts the core CPI will grow 2.7% in fiscal 2024, 2.4% in fiscal 2025, and 2% in fiscal 2026, compared with previous forecasts of 2.5%, 1.9%, and 1.9%, respectively.

The rate hike was decided by an 8-to-1 vote at the BOJ's Policy Board meeting. The sole dissenting member, Toyoaki Nakamura, argued that the bank should confirm a rise in corporate earnings momentum before implementing further rate increases.