Bank of Japan Rate Decision Live: The Bank of Japan (BOJ) raised its key policy rate 25 bps to 0.75%, its highest level since September 1995. This move takes the key rate to a 30-year high, potentially rattling world markets. The BOJ began its final policy meeting of the year Thursday.
The yen weakened against the dollar after the BoJ statement, suggesting the rate hike was fully priced into markets. The yen was down more than 0.3% at 156.02 per dollar
For years, Japan kept interest rates near or below zero to fight deflation, even as other major central banks raised rates sharply after the pandemic. But rising inflationary pressures forced the BOJ to shift its stance, despite Japan’s economy shrinking at a 2.3% annual rate in the last quarter.
Another major trigger for the move is the yen’s persistent weakness. The currency has dropped against the U.S. dollar and other major currencies, making imports such as food, fuel and essential goods more expensive. Higher interest rates could help strengthen the yen by attracting more investment into Japanese markets, as global investors look for better returns on yen-denominated assets.
The latest rate hike also signals a broader policy shift, with the BOJ expected to continue “normalising” interest rates in 2026. Any further tightening could influence global markets, since Japan has long been a source of low-cost capital for investors worldwide. A stronger yen or more rate hikes could affect currency trends, bond markets and investor sentiment across Asia, the U.S. and Europe.
Check for Live updates on the BoJ rate hike and its impact on global markets
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