{"id":15312,"date":"2026-06-16T14:38:23","date_gmt":"2026-06-16T11:38:23","guid":{"rendered":""},"modified":"2026-06-16T14:38:23","modified_gmt":"2026-06-16T11:38:23","slug":"bank-of-japan-raises-interest-rate-to-1-for-first-time-since-1995","status":"publish","type":"post","link":"https:\/\/harici.com.tr\/en\/bank-of-japan-raises-interest-rate-to-1-for-first-time-since-1995\/","title":{"rendered":"Bank of Japan raises interest rate to 1% for first time since 1995"},"content":{"rendered":"

The Bank of Japan (BoJ) has raised its short-term policy interest rate to “about 1%”, lifting borrowing costs to their highest level in 31 years as the country seeks to adapt to a persistent inflationary environment.<\/p>\n

The 0.25 percentage point increase, which was widely anticipated by financial markets, brings Japan to what analysts view as a critical milestone in the central bank’s efforts to normalize monetary policy after decades of ultra-low interest rates and deflation.<\/p>\n

The BoJ’s policy rate was last at the 1% level in 1995. At that time, the central bank was in the process of cutting borrowing costs following the collapse of the Japanese asset price bubble in the late 1980s.<\/p>\n

In its accompanying statement, the BoJ signaled its intention to continue the normalization process, stating it would adjust the policy rate and the degree of monetary easing in accordance with developments in economic activity, prices, and financial conditions.<\/p>\n

The BoJ also announced that it will halt the reduction of its monthly Japanese government bond purchases starting in April 2027, stabilizing the pace of purchases at approximately 2 trillion yen per month. This move was also largely expected by the market.<\/p>\n

Following the announcement, the yen traded flat against the US dollar at approximately 160.2.<\/p>\n

While noting that high crude oil prices continue to weigh on economic activity, the BoJ stated that “the risk of a significant slowdown in the economy appears to have diminished compared to some time ago.”<\/p>\n

The central bank also observed that the pass-through of high fuel prices has progressed relatively quickly, spreading from business-to-business transactions to consumer prices, which could keep core consumer inflation above its 2% target.<\/p>\n

Having exited negative interest rates in 2024, the BoJ raised rates twice in 2025. The bank is widely expected to settle into a pattern of gradual tightening roughly every six months. Some economists believe another 0.25 percentage point hike could come as early as October.<\/p>\n

This week’s rate decision was approved by a 7-to-1 vote on the bank’s Policy Board. The board convened with eight members due to Governor Kazuo Ueda’s hospitalization last week.<\/p>\n

Toichiro Asada, the sole dissenting member, argued that the situation in the Middle East poses downside risks to production and employment for Japan, rather than upside risks to prices.<\/p>\n

“The vote distribution is interesting and suggests the board has become a bit more balanced; previously, the board had a noticeably hawkish tilt,” said Stefan Angrick, senior economist and head of Japan at Moody’s Analytics.<\/p>\n

Speaking to the Financial Times, Angrick added<\/a><\/span>: “The reality is that the BoJ has no good options. They can raise rates to strengthen the yen and reduce inflationary pressure, but that hurts the economy.”<\/p>\n

Ueda, who is receiving treatment for a liver condition, did not attend the meeting and did not cast a vote. He is expected to return for the July meeting. This week’s meeting was chaired by BoJ Deputy Governor Ryozo Himino.<\/p>\n

The afternoon press conference will be led by the bank’s other deputy governor, Shinichi Uchida. Uchida’s remarks will be closely monitored for indications of how the BoJ continues to assess the adverse economic impacts of the war involving Iran.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Bank of Japan (BoJ) has raised its short-term policy interest rate to “about 1%”, lifting borrowing costs to their highest level in 31 years as the country seeks to adapt to a persistent inflationary environment. The 0.25 percentage point increase, which was widely anticipated by financial markets, brings Japan to what analysts view as […]<\/p>\n","protected":false},"author":1,"featured_media":15313,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[4],"tags":[3273,1958,19461,302,917,19462,4051,8907,5858,4336,19459,4050,19460,19458,19454,19455,19456,19457,871],"class_list":["post-15312","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-asia","tag-bank-of-japan","tag-boj","tag-bond-purchases","tag-financial-times","tag-inflation","tag-interest-rate-hike","tag-interest-rates","tag-japanese-government-bonds","tag-japanese-yen","tag-kazuo-ueda","tag-macroeconomics","tag-monetary-policy","tag-monetary-tightening","tag-moodys-analytics","tag-ryozo-himino","tag-shinichi-uchida","tag-stefan-angrick","tag-toichiro-asada","tag-tokyo"],"yoast_head":"\nBank of Japan raises interest rate to 1% for first time since 1995 - 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