Japan's Central Bank Raises Rate To 17-Year High Of 0.5 Pct

1/24/2025 3:05:18 AM

(MENAFN- Kuwait News Agency (KUNA)) TOKYO, Jan 24 (KUNA) -- Japan's central bank on Friday raised its policy interest rate to about 0.5 percent from 0.25 percent, its highest level in 17 years.
At a two-day policy meeting, Bank of Japan's (BOJ) Governor Kazuo Ueda and his eight board colleagues voted by 8 to 1 to decide the first rate hike since last July, when it raised rates to 0.25 percent from the previous range of around zero to 0.1 percent. The last time the key short-term rate at 0.5 percent was October 2008 amid a global financial crisis.
Japan's economic activity and prices have been developing generally in line with the BOJ's outlook, and the bank "judged it appropriate to adjust the degree of monetary accommodation from the perspective of sustainable and stable achievement of the price stability target of 2 percent," the central bank said in a statement.
The BOJ also pointed out that "there have been many views expressed by firms stating that they will continue to raise wages steadily in this year's annual spring labor-management wage negotiations."
As for the future conduct of monetary policy, the BOJ said it will depend on developments in economic activity and prices as well as financial conditions going forward.
However, it said, "given that real interest rates are at significantly low levels, the bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation" if the current BOJ's outlook for economic activity and prices will be realized.
Meanwhile, the central bank said the world's third-largest economy is likely to keep growing at a pace above its potential growth rate. "Concerning risks to the outlook, there remain high uncertainties surrounding Japan's economic activity and prices, including developments in overseas economic activity and prices, developments in commodity prices, and domestic firms' wage- and price-setting behavior," the BOJ said in its outlook report adopted at the policy meeting.
The bank lifted its inflation forecast for fiscal 2025 starting in April to 2.4 percent, up from 1.9 percent it estimated in October last year. (end)
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