BOJ Raises Policy Rate to 31-Year High Amid Inflation Risks

On September 18 the Bank of Japan (BOJ) lifted its benchmark short-term policy rate by 25 basis points to 1.25 %, the highest level since 1995. The decision was approved by a 7-2 vote of the nine-member Policy Board. Board members Toichiro Asada and Ayano Sato voted against the hike, citing concerns that the economy remains fragile and core inflation is still below the 2 % target. The new rate takes effect on September 24.

Bank of Japan Raises Rates to 1.25%, Highest in 31 Years; Ueda Says Larger or Consecutive Hikes Not Ruled Out — BigGo Finance

The BOJ began normalising monetary policy in March 2024, ending decades of ultra-low and negative rates. Since then it has raised rates six times, most recently in June 2026, with a three-month interval—the shortest gap since 1990. The move comes as Japan faces rising import-price pressures from higher global oil prices and a weak yen that has amplified inflationary risks.

BBC News

• Policy rate: 1.00 % -> 1.25 % (25 bp)

Bank of Japan raises policy rate to 1.25%, stoking repayment concerns among variable-rate mortgage holders in Japan — BigGo Finance

• Vote: 7-2 (Asada, Sato dissent)

Asia Times

• Headline CPI (August): 1.9 % YoY

Bank of Japan Raises Rates to 1.25%, Highest in 31 Years; Ueda Says Larger or Consecutive Hikes Not Ruled Out — BigGo Finance

• Core CPI (August): 1.7 % YoY, down from 1.8 % in July

Bank of Japan Raises Rates to 1.25%, Highest in 31 Years; Ueda Says Larger or Consecutive Hikes Not Ruled Out — BigGo Finance

• Wholesale inflation: corporate goods prices up 7.6 % YoY in August

The Bank of Japan raises rate to 31-year high

• Yen/USD: slipped to 156.64-156.91 after the announcement

Bank of Japan Raises Benchmark Interest Rate by 0.25%p to 1.25% in 3 Months, Accelerating Hikes

• 10-year JGB yield: fell 4.9 bp to 2.947 %

Asia Times

Governor Kazuo Ueda said the bank is entering a “new phase” focused on stabilising underlying inflation at the 2 % target rather than merely lifting it. He added that the BOJ will continue to adjust policy based on economic, price and financial-condition data, without committing to a fixed timetable for future hikes.

Bank of Japan Raises Rates to 1.25%, Highest in 31 Years; Ueda Says Larger or Consecutive Hikes Not Ruled Out — BigGo Finance

Board members Toichiro Asada and Ayano Sato, appointed by Prime Minister Sanae Takaichi, argued that core inflation remains below 2 % and that the economy does not yet warrant tighter policy. Their dissent was noted by analysts as a signal of internal division.

Asia Times

Sources differ on the exact post-hike yen level: CNBC reported 156.64, the Globe and Mail cited 156.91, and other outlets noted a range up to 157.84. All agree the yen weakened despite the rate increase.

Bitcoin Tops $77K After Bank of Japan Raises Rates to 1.25%

• “It’s important to stabilize underlying inflation at 2 per cent. Our policy phase has changed,” — Kazuo Ueda

The Globe and Mail (Toronto)

• “The rate hike itself was in line with market expectations, but the two dissenting votes came as a modest surprise, as only some market participants had anticipated them,” — Hirofumi Suzuki, chief FX strategist, SMBC

The Straits Times

The BOJ’s next policy meeting is scheduled for October 29-30, where Governor Ueda will assess inflation trends and financial conditions. Analysts expect the bank could raise rates to 1.5 % by March 2027, with a possible terminal rate of 1.75 % or higher.

The Straits Times

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Bitcoin Tops $77K After Bank of Japan Raises Rates to 1.25%

*This article synthesises information from multiple reports on the September 18 BOJ rate decision, focusing on the core event, its economic backdrop, quantitative details, official commentary, dissenting views, and forward-looking expectations.*

The Straits Times