The Bank of Japan raised its key interest rate by 0.25 percentage points to 1.25%, the highest level since 1995, the central bank announced Friday in Tokyo.
The decision was made by a 7-to-2 vote among policymakers. Economists had broadly anticipated a move of this magnitude.
The hike marks the second rate increase this year and the sixth since the BoJ abandoned its era of negative interest rates. Japan's currency managers last raised borrowing costs in June. In March 2024, the central bank delivered its first rate increase in 17 years, ending decades of ultra-loose monetary policy.
Policymakers cited the economic fallout from the Iran conflict as a factor behind the decision, alongside domestic inflation pressures that have persisted since the end of negative rates.
