Bank of Japan Raises Rate to 1.25%, Highest in 31 Years

The Bank of Japan raised its policy rate by 0.25 percentage points to 1.25 percent on Thursday, September 18, 2026 (27 Shahrivar 1405) Tehran time (Friday in Tokyo), the highest level in 31 years. According to Al Jazeera, it was the BOJ's first rate hike since its June meeting, and the central bank said the move aims to help counter inflation risks.

Core consumer inflation in Japan held steady near the BOJ's 2 percent target in August, the report said, as companies continued passing higher food and grocery costs on to consumers. BOJ Executive Director Koji Nakamura said on Monday that a "slow moving demographic shock" and a shrinking labor pool are a structural factor lifting wages. Analysts said the US Federal Reserve's rate hike on Wednesday added pressure on the BOJ to keep pace; the BOJ's policy rate remains below the European Central Bank's 2.5 percent rate, set last week.