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BOJ Lifts Rate to 1.25% as Tokyo CPI Climbs

By Drooid · Oct 2, 2026, 10:31 AM UTC · How we work

Summary

BOJ Raises Rate

The Bank of Japan lifted its policy rate to 1.25% in September as Tokyo core CPI hit 2.7% YoY.
Tokyo water utility charges surged 65.6% YoY after the summer suspension of the basic fee ended.
Boxed-lunch (bento) prices in Tokyo rose 28.1% YoY in September, while core-core CPI reached 3.0%.
Traders priced an 82% chance of a December BOJ hike as the yen hovered near ¥157.8 per dollar.

Summary

Treasury Yields Climb

The August jobless rate rose to 2.5% from 2.4%, adding labor-market pressure.
U.S. 10-year Treasury yields climbed into the 5.30% range, supporting yen appreciation.
Euro-yen slipped to 177.48–52, more than 1.50 yen lower than the previous day.
Japanese importers bought dollars after the CPI release, briefly pushing USD/JPY toward 158.20.

History

Historical Context

After a decade of zero-interest policy, the Bank of Japan raised its short-term rate to 0.25 % in 2006, ending years of zero rates. Confronted with long-standing deflation, the BOJ adopted a 2 % inflation target in the 2020s, and under Governor Kazuo Ueda it lifted the policy rate to 1.25 % in September 2024.

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BOJ Raises Rate

The Bank of Japan lifted its policy rate to 1.25% in September as Tokyo core CPI hit 2.7% YoY.
Tokyo water utility charges surged 65.6% YoY after the summer suspension of the basic fee ended.
Boxed-lunch (bento) prices in Tokyo rose 28.1% YoY in September, while core-core CPI reached 3.0%.
Traders priced an 82% chance of a December BOJ hike as the yen hovered near ¥157.8 per dollar.

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