{"id":774459,"date":"2026-09-18T07:20:14","date_gmt":"2026-09-18T07:20:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/774459\/"},"modified":"2026-09-18T07:20:14","modified_gmt":"2026-09-18T07:20:14","slug":"japan-raises-interest-rate-to-new-31-year-high-to-curb-rising-prices","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/774459\/","title":{"rendered":"Japan raises interest rate to new 31-year high to curb rising prices"},"content":{"rendered":"

Japan’s central bank has raised its main interest rate to a fresh 31-year high as it continues to move away from decades of ultra-low borrowing costs and as the country faces increasing economic pressures.<\/p>\n

In a widely expected move on Friday, the Bank of Japan (BOJ) increased the rate from 1% to 1.25% – a level not seen since 1995.<\/p>\n

It comes as major central banks around the world are hiking rates as higher energy prices caused by the Iran war are helping to push up inflation.<\/p>\n

On Wednesday, the US Federal Reserve<\/a> raised its benchmark interest rate for the first time in over three years, while the European Central Bank<\/a> also increased its borrowing costs earlier this month.<\/p>\n

The BOJ has been raising the rate since 2024<\/a>, when it stood at minus 0.1%. It has now hiked rates six times in the last two and a half years.<\/p>\n

Since then the bank has been steadily putting up the rate as it tries to reach a level similar to other major economies.<\/p>\n

When a central bank raises rates, known as tightening monetary policy, the country’s currency usually becomes stronger as it makes the it more attractive to traders.<\/p>\n

“One of the world’s last sources of ultra-cheap money is disappearing,” said market analyst Lale Akoner from investment company eToro.<\/p>\n

Japan is facing several economic challenges including a persistently weak yen, rising prices and a shrinking workforce.<\/p>\n

Official figures published on Friday ahead of the BOJ announcement showed that inflation eased slightly last month.<\/p>\n

Core inflation fell to 1.7% in August from 1.8% the previous month but remains close to the bank’s 2% target level.<\/p>\n

While Japan’s inflation rate is not high by international standards, rising prices are a relatively new development in the economy.<\/p>\n

Until recently the country had experienced very low inflation or deflation – falling prices – for around three decades.<\/p>\n

Global oil and gas prices have risen this year as the Iran war caused major disruptions to shipments through the key Strait of Hormuz shipping route.<\/p>\n

Japan is particularly vulnerable to those supply interruptions as it is heavily reliant on energy from the Middle East.<\/p>\n

The country’s currency has also been under pressure in recent months.<\/p>\n

In August, Tokyo and Washington confirmed that they had jointly intervened to halt a slide in the yen after it fell to a fresh 40-year low.<\/p>\n

The coordinated intervention was the first since 2011, when both countries took action together to weaken the yen after the devastating earthquake and tsunami that hit eastern Japan.<\/p>\n

Both Japan’s Ministry of Finance and US Treasury Secretary Scott Bessent said at the time that they would not hesitate to conduct more joint interventions in the future.<\/p>\n

Bessent has also been ramping up pressure on the BOJ to raise interest rates to help support the yen, calling on its Governor Kazuo Ueda to “do the right thing”.<\/p>\n

“If [the yen] remains weak despite higher rates, the resulting inflation pressure could force the BOJ to tighten faster than markets or Japan’s government would like,” Akoner said.<\/p>\n","protected":false},"excerpt":{"rendered":"Japan’s central bank has raised its main interest rate to a fresh 31-year high as it continues to…\n","protected":false},"author":2,"featured_media":774460,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":["post-774459","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/774459","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=774459"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/774459\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/774460"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=774459"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=774459"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=774459"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}