FX.co ★ Bank Of Japan Raises Key Interest Rate

The Bank of Japan (BoJ) has increased its benchmark interest rate by 15 basis points and announced a reduction in its bond purchasing activities.

The policy board voted 7-2 in favor of raising the uncollateralized overnight call rate to approximately 0.25 percent.

In a unanimous decision, the board also agreed to scale down the monthly outright purchase of government bonds to about JPY 3 trillion by the first quarter of 2026.

The central bank anticipates an inflation rate of 2.5 percent for the fiscal year 2024, down from the 2.8 percent estimate made in April. This revision primarily reflects governmental measures to curb energy prices.

Conversely, the inflation outlook for 2025 has been revised upward to 2.1 percent from 1.9 percent, while the forecast for fiscal 2026 remains unchanged at 1.9 percent.

Following a revision of GDP figures for fiscal 2023, the BoJ has adjusted its growth projection for fiscal 2024 downwards to 0.6 percent from 0.8 percent. However, growth forecasts for fiscal years 2025 and 2026 remain steady at 1.0 percent.