Bank of Japan Raises Rate After 17 Years
Known as the BOJ, the central bank has raised its reference short-term policy rate to about 0.5 percent therefore the highest in almost 17 years.
The ruling comes as the central bank of the country has said consumer price rises are picking up. Compared to the year-before-inflation increase, consumer prices in December went up by 3 percent.
Japan's central bank stated on Friday the change is designed to help control inflation. It has been since July 2024 when Japan last increased its rates, therefore it indicates a departure from the very low interest rates that have characterized the monetary policy of the country for years.
The BOJ is ready to implement policies bit by bit, and inflation would be among those factors overall.
Official figures show that consumer prices in Japan are currently increasing at the most rapid rate since 16 months. Increasing the borrowing rate to steady the economy is one way BOJ is acting to slow the rising prices. Governor Kazuo Ueda feels that forward monetary direction is vital for stable development of the economy.It also sets the central bank to move more freely in the future. The BOJ can now raise interest rates but later reduce them if more stimulus is still needed.
The central banks reach the decision when inflationary pressures in world economies are a worry. Given that Japan's monetary policy affects capital flows and currency markets worldwide, a BOJ policy change could have worldwide consequences. This time, investors seem to be better prepared as they were during the surprise hike in July 2024, that saw a sell-off in the world&'s stock market.
