Bank of Japan Raises Rate to 0.5%, Largest Hike Since 2007 Amid Inflation Rise

Jan 24, 2025, 03:25 AM

The Bank of Japan raised its benchmark interest rate by 25 basis points to 0.5% on Friday, the largest hike since 2007, bringing rates to their highest level since October 2008. The move, widely anticipated with a 95% market probability, reflects the central bank's response to rising inflation, which has climbed to 3%—and 3.6% in headline terms—for the first time in 16 months. The decision, made with an 8-1 vote during the policy meeting, also hints at further rate hikes, as the Bank indicated it would continue to raise the policy rate if economic and price trends meet expectations. This is the third rate hike in less than 12 months after 17 years without an increase. Governor Kazuo Ueda stated that the Bank would maintain easy financial conditions but adjust monetary policy as necessary.