Key facts
- The Bank of Japan raised its interest rate to 1%.
- This is the highest interest rate level since 1995.
- BOJ Deputy Governor Shinichi Uchida warned of inflation risks.
- Uchida stated underlying inflation could deviate from the 2% target.
- Uchida's remarks aimed to stabilize the yen.
- The yen is trading within a tight, historically weak range.
- A Bloomberg survey indicates most watchers expect another rate hike this year.
- The BOJ's decision follows a period of ultra-loose monetary policy.
The Bank of Japan (BOJ) has implemented a significant policy shift, raising its key interest rate to 1%. This historic decision marks the highest rate level since 1995. Following the announcement, BOJ Deputy Governor Shinichi Uchida issued a warning regarding potential inflation risks. He noted that underlying inflation could deviate from the central bank's 2% target. Uchida's hawkish commentary is seen as an effort to stabilize the Japanese yen.