Bank of Japan Lifts Rate to 1.25%, Highest in 31 Years, on Inflation Overshoot Risk
Updated
Updated · Financial Times · Sep 20
Bank of Japan Lifts Rate to 1.25%, Highest in 31 Years, on Inflation Overshoot Risk
3 articles · Updated · Financial Times · Sep 20
Summary
A quarter-point BOJ increase took the policy rate to 1.25% on Friday, the highest level since 1995, after officials warned inflation could rise above the 2% target.
Ueda tied that risk to the US war in Iran, saying higher oil and commodity prices are hitting import-dependent Japan harder because of the yen's weakness.
Thursday's PMI releases are now the first key test of that view after the meeting: August manufacturing stood at 54.9 and services at 52.5, both in expansion territory.
Price pressure is already visible in company data, with output prices rising 7.6% annually in August as firms passed through higher import costs.
Markets are still split on the next move because Ueda offered no timetable, leaving some analysts looking for an October hike and others for December after the yen fell more than 2% this week.