BOJ raises rates by 25 basis points to 1.25%, highest since 1995

The Bank of Japan raised its policy rate by 25 basis points to 1.25% at its monetary policy meeting today, marking its first rate increase in three months since the June meeting. The move accelerates the pace of hikes, which had come roughly once every six months since March 2024, as the central bank moved to curb the risk of further inflation driven by higher oil prices and a weaker yen. Raising the target for the uncollateralized overnight call rate to 1.25% brought it to its highest level since 1995. The decision passed 7-2, with policy board members Doichiro Asada and Ayano Sato dissenting.