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Japan's central bank raised its main interest rate to 1.25%, marking a 31-year high since 1995, in response to increasing inflation and economic pressures. The Bank of Japan (BOJ) has incrementally increased rates six times since late 2024 as global oil prices rise due to the Iran war, affecting energy supplies critical for Japan's economy. While inflation slightly eased to 1.7% in August from 1.8% the previous month, it remains close to the BOJ's target level of 2%, reflecting persistent economic challenges including a weak yen and rising import costs.
Written locally by qwen2.5:14b on 2026-09-18,
using this article's own text rather than the other coverage of the
same event (that is the story summary below).
Story summary
The Bank of Japan (BOJ) raised its main interest rate to 1.25% on Friday, marking a fresh 31-year high since 1995. This increase follows six hikes in the past two and a half years, moving away from decades of ultra-low rates. The move aims to address rising inflation driven by higher energy prices and other global supply pressures, which is now nearing 2%—a significant shift for Japan where annual inflation has been historically low. Major central banks worldwide, including the US Federal Reserve, have also raised their interest rates amid similar economic challenges. Japan's currency, the yen, typically strengthens as a result of higher interest rates but faces additional pressure from demographic issues such as a shrinking workforce and rising wages due to labor shortages.
Written for “Japan Raises Interest Rate” on 2026-09-18,
grounded in this article and the 2 other(s) covering the same event.
Why this leaning score
This article does not take a side on a contested political
question, so it has no leaning score. That is an
answer rather than a gap: a match report or a rescue can be warmly
or critically written without being left or right, and scoring it
anyway is how approval of a subject gets recorded as a political
position.
No political leaning scored for article 17747 · logged 2026-09-18
- Published
Japan's central bank has raised its main interest rate to a fresh 31-year high as it continues to move away from decades of ultra-low borrowing costs and as the country faces increasing economic pressures.
asserted
country → publish → pressures
On Friday, the Bank of Japan (BOJ) increased the rate to 1.25% from 1% - a level not seen since 1995.
asserted
Bank → increase → 1995
It comes as major central banks around the world are hiking rates as higher energy prices caused by the Iran war are helping to push up inflation.
asserted
prices → come → inflation
On Wednesday, the US Federal Reserve raised its benchmark interest rate for the first time in over three years, while the European Central Bank also increased its borrowing costs earlier this month.
asserted
Bank → raise → costs
The BOJ has been raising the rate since 2024, when it stood at minus 0.1%.
asserted
it → raise → %
It has now hiked rates six times in the last two and a half years.
asserted
It → hike → years
Since then the bank has been steadily putting up the rate as it tries to reach a level similar to other major economies.
asserted
it → put → economies
When a central bank raises rates, the country's currency usually becomes stronger as it makes the it more attractive to traders.
asserted
it → raise → traders
Japan is facing several economic challenges including a persistently weak yen, rising prices and a shrinking workforce.
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Japan → face → yen
Official figures published on Friday ahead of the BOJ announcement showed that inflation eased slightly last month.
asserted
inflation → publish → announcement
Core inflation fell to 1.7% in August from 1.8% the previous month but remains close to the bank's 2% target level.
asserted
inflation → fall → level
While Japan's inflation rate is not high by international standards, rising prices are a relatively new development in the economy.
asserted
prices → rise → economy
Until recently the country had experienced very low inflation or deflation - falling prices - for around three decades.
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country → experience → decades
Global oil and gas prices have risen this year as the Iran war caused major disruptions to shipments through the key Strait of Hormuz shipping route.
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war → rise → route
In August, Tokyo and Washington confirmed that they had jointly intervened to halt a slide in the yen after it fell to a fresh 40-year low.
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it → confirm → low
The coordinated intervention was the first since 2011, when both countries took action together to weaken the yen after the devastating earthquake and tsunami that hit eastern Japan.
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that → take → Japan
Both Japan's Ministry of Finance and US Treasury Secretary Scott Bessent said at the time that they would not hesitate to conduct more joint interventions in the future.
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they → say → future
Bessent has also been ramping up pressure on the BOJ to raise interest rates to help support the yen, calling on its Governor Kazuo Ueda to "do the right thing".
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Bessent → ramp → thing
This breaking news story is being updated and more details will be published shortly.
asserted
details → break → ?
You can receive Breaking News on a smartphone or tablet via the BBC News App.
asserted
You → receive → App
You can also follow @BBCBreaking on X, external to get the latest alerts.
asserted
You → follow → alerts
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