The Bank of Japan raised rates on Friday in a move that was widely expected and might be followed closely by another. It took the uncollateralized overnight call rate to 1.25% from 1%, as the central bank’s policy board concluded its two-day policy meeting on Friday. The policy rate is at its highest level since 1995.
The decision to up the rate was almost a given. All 52 economists surveyed by Bloomberg between Sept. 4 and Sept. 10 believed that the BOJ would do so. What is not certain is the path forward.
The bank is getting pressured by the United States to take action and stop the yen from weakening while it is also closely monitoring the state of the domestic economy and inflation. Kazuo Ueda is scheduled to hold a news conference later Friday. Investors have said they will be looking for indications of increased hawkishness.
The BOJ has been increasing rates steadily for more than two years, taking rates positive in March 2024. Its move higher this week follows a rate increase by the U.S. On Wednesday, the Fed took the fed funds rate up 25 basis points to a range of 3.75% to 4%.
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