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<\/a><\/p>\nPublished On 16 Jun 202616 Jun 2026<\/p>\n
Japan\u2019s central bank has raised interest rates to a three-decade high, citing price pressures stemming from the United States-Israel war on Iran.<\/p>\n
The Bank of Japan (BOJ) on Tuesday voted 7-1 to hike its benchmark rate to 1 percent, a milestone in the country\u2019s shift away from decades of rock-bottom borrowing costs.<\/p>\n
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The BOJ\u2019s widely expected quarter-point hike lifted the key policy rate to its highest level since 1995, continuing its march away from an ultra-loose monetary policy aimed at reversing Japan\u2019s economic stagnation.<\/p>\n
In a statement, the BOJ said that while Japan\u2019s rate of inflation has been on target, rising oil prices have filtered down to transactions among businesses, which could lead to higher prices \u201cacross a wide range of items\u201d.<\/p>\n
\u201cAgainst this backdrop, taking into account that medium-to-long-term inflation expectations have also continued to rise, there is a risk of underlying CPI [consumer price index] inflation deviating upward to a level above the price stability target of 2 percent,\u201d the central bank said.<\/p>\n
Japan imported about 95 percent of its crude oil from the Middle East before the start of the war, leaving the world\u2019s fourth-largest economy vulnerable to spikes in\u00a0fuel prices.<\/p>\n
Prime Minister Sanae Takaichi\u2019s government has taken a series of measures to keep energy prices under control, including dipping into Japan\u2019s strategic oil reserves and providing subsidies for households\u2019 gas and electricity bills.<\/p>\n
Japan\u2019s core CPI, which does not include fresh food prices, rose just 1.4 percent in April year-on-year, which the BOJ credited to the government\u2019s measures to \u201creduce the household burden of higher energy prices\u201d.<\/p>\n
Min Joo Kang, senior economist for South Korea and Japan at ING, said the rate hike signalled \u201ca positive shift for Japan\u2019s economy, suggesting progress toward sustained growth and price stability\u201d.<\/p>\n
\u201cThe BoJ now sees its sustainable inflation target of 2 percent as within reach, which supports its confidence in gradually normalising policy,\u201d Kang told Al Jazeera.<\/p>\n
The BOJ began moving away from decades of ultra-low and negative interest rates in 2024, scrapping its -0.1 percent rate with its first hike in 17 years in March of that year.<\/p>\n
Japan was plunged into a prolonged period of anaemic growth and deflation, known as the \u201clost decades\u201d, after the bursting of an asset bubble in the early 1990s.<\/p>\n
Successive Japanese governments have had limited success reversing the decline although the economy has recently shown tentative signs of recovery.<\/p>\n
Japan\u2019s gross domestic product grew an annualised 2.1 percent in the first three months of this year, the fastest expansion in six quarters.<\/p>\n","protected":false},"excerpt":{"rendered":"Bank of Japan hikes benchmark rate to 1 percent, continuing shift away from decades of ultra-low\u00a0borrowing costs.\u00a0 Published…\n","protected":false},"author":2,"featured_media":740435,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[6109,45,1686,49,48,46,2454,206083],"class_list":["post-740434","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-asia-pacific","tag-business","tag-business-and-economy","tag-ca","tag-canada","tag-economy","tag-japan","tag-us-israel-war-on-iran"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/740434","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=740434"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/740434\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/740435"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=740434"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=740434"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=740434"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}