BOJ raised its policy rate by 25 basis points to 1.25%, the highest level since 1995. The yen fell after the decision, while markets continued to price further BOJ tightening. The Bank of Jap
The Bank of Japan (BOJ) raised its policy interest rate by 25 basis points to 1.25% on September 18, taking borrowing costs to their highest level in 31 years, since 1995. The decision was made by a 7-2 vote, with board members Toichiro Asada and Ayano Sato voting against the increase.
— TheNewsCrypto (@The_NewsCrypto) September 18, 2026
JUST IN: The Bank of Japan raised its policy interest rate by 25 basis points to a 31-year high of 1.25%, hitting its highest level since 1995.
The hike comes as the BOJ steps up its fight against persistent inflation and rising energy costs.
#BankOfJapan… pic.twitter.com/XnPWeJJ8tH
The move was widely expected by financial markets as the BOJ continues to deal with inflation and higher energy costs. Japan’s inflation rate remains around the central bank’s 2% target, while rising oil prices have added pressure to household and business costs. Japan relies heavily on imported energy, making higher global oil prices an important factor for the economy.
The BOJ said it would continue adjusting interest rates based on economic and price conditions as well as financial conditions. However, the two dissenting votes and the absence of stronger guidance on the timing of another increase drew attention from investors.
The Japanese yen moved lower after the decision instead of strengthening. Investors had already largely priced in the 25-basis-point increase, shifting attention toward the BOJ’s future policy direction and the split among policymakers. Reuters reported that the yen weakened as markets viewed the guidance as less aggressive than some had expected.
Japanese stocks moved in the opposite direction. The Nikkei 225 rose after the BOJ announcement, according to the Associated Press. The dollar was trading at around 155 yen, after USD/JPY had previously moved above 160 earlier this year.
The rate increase marks another step in the BOJ’s move away from decades of ultra-low interest rates as policymakers respond to sustained price pressures.
The BOJ’s next policy meeting is scheduled for October 29-30, followed by another meeting on December 17-18. That pricing implied a rate of about 1.47% by October and 1.51% by December under the market’s then-prevailing path.
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