PREVIEW

Japan Raises Interest Rates to Highest Level in 31 Years. The Bank of Japan raised its key interest rate from one percent to 1.25%, reaching a level last seen in 1995. The widely expected move continues Japan's gradual shift away from decades of ultra-low borrowing costs. The BOJ has now increased rates six times since beginning its tightening cycle in 2024. The decision comes as higher energy prices linked to the Iran war continue pushing inflation higher worldwide. Japan's core inflation eased slightly to 1.7% in August, remaining close to the bank's two-percent target. However, the country faces persistent economic challenges, including a weak yen, rising prices, and a shrinking workforce. Japan depends heavily on Middle Eastern energy, leaving it vulnerable to disruptions around the Strait of Hormuz. The yen recently reached a forty-year low, prompting coordinated intervention by Japan and the United States.
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