BOJ raises rates to 31-year high as inflation risks mount

The Bank of Japan raised its policy rate to a 31-year high on September 18, lifting it to 1.25% from 1%, in a 7-2 decision. The move signals a shift toward preventing underlying inflation from exceeding the BOJ’s target, while still leaving room for additional increases. New board members Toichiro Asada and Ayano Sato dissented. Despite the hawkish message, the yen weakened as markets focused on their call for patience. Governor Kazuo Ueda said the BOJ’s priority has moved from pushing inflation toward 2% to guarding against an overshoot as underlying inflation nears two percent.