Key facts
- The Bank of Japan increased its policy rate by 0.25 percentage points to 1.0%, the highest since 1995.
- The BOJ's decision was made with a 7-1 vote, indicating some internal dissent.
- The yen traded near 160.26 against the U.S. dollar following the rate hike.
- A preliminary Middle East peace deal between the U.S. and Iran was announced, though doubts linger.
- The Reserve Bank of Australia maintained its current interest rates.
- The dollar index held steady at 99.58.
The Bank of Japan raised its policy rate by 0.25 percentage points to 1.0%, marking its highest level since 1995 and the first increase since December. The decision, made with a 7-1 vote, signals a shift from ultra-loose monetary policy to combat rising inflation, with concerns that prices may exceed the central bank's 2% target. BOJ Deputy Governor Shinichi Uchida noted ongoing uncertainty regarding oil supply despite progress on a U.S.-Iran peace deal, emphasizing the need to avoid falling behind the curve on inflation. The yen traded near 160.26 against the U.S. dollar. Meanwhile, the dollar index held steady at 99.58, and the Reserve Bank of Australia maintained its interest rates. Global markets reacted cautiously to the preliminary Middle East peace deal, with lingering doubts about its durability and impact on shipping routes.