economy
Bank of Japan hikes rates to 1%, highest since 1995, as yen and inflation worries take hold
This is the BOJ's first hike since December, when it raised rates to its current level of 0.75%, also its highest level in over 30 years.
TL;DR
- The Bank of Japan (BOJ) raised its policy rate to 1%, the highest in over 30 years, marking its first hike since December.
- The decision was split 7-1, with one board member dissenting.
- The tightening policy addresses concerns over a weak yen and creeping inflation, potentially exacerbated by the Iran war.
- The BOJ will continue reducing government bond purchases, aiming for 2 trillion yen monthly by April 2027.
- Despite recent low inflation figures, the BOJ notes potential price pass-through from rising crude oil prices, seen in the producer price index.
- A weak yen, while boosting exports, increases imported inflation and strains government finances due to subsidies.