PREVIEW

Bank of Japan Raises Rates to Highest Level Since 1995. The Bank of Japan has raised interest rates to 1%, marking its highest level in 31 years and signaling another major step away from decades of ultra-loose monetary policy. The widely expected increase comes as policymakers try to contain inflation pressures fueled by higher energy costs following the conflict in the Middle East. Officials said concerns about economic damage from the crisis have eased thanks to government support measures and efforts to secure alternative energy supplies. However, they warned that companies are rapidly passing higher costs onto consumers, raising the risk that inflation could exceed the central bank’s 2% target. Markets reacted positively, with Japan’s Nikkei index hitting a new record high, while the yen strengthened slightly against the U.S. dollar. Analysts now expect the Bank of Japan to continue raising rates gradually over the coming months if inflation remains elevated.
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