Bank of Japan Raises Interest Rates to 0.25%, Outlines Bond Taper Plan

Jul 31, 2024, 03:57 AM

The Bank of Japan (BOJ) has raised its short-term interest rate target to 0.25%, marking a significant move in its monetary policy. This increase of 15 basis points from the previous range of 0-0.1% comes as the central bank aims to address persistent inflation pressures and a stagnant economy. The decision was made during a two-day policy meeting that concluded on Wednesday. Additionally, the BOJ unveiled plans to reduce its bond buying program by half by the first quarter of 2026. This is the second rate hike by the BOJ since 2007, underscoring its determination to normalize policy. The yen dropped following the announcement, reflecting investor concerns over the wide yield differential between Japan and other major economies. Reports from Nikkei, NHK, and Jiji highlighted that the rate hike follows inflation surpassing the BOJ's 2% target.