Bank of Japan raises interest rates to 31-year high, flags concerns over inflation

TOKYO, JAPAN - SEPTEMBER 16: The Bank of Japan headquarters stand at dusk on September 14, 2026 in Tokyo, Japan. Tomohiro Ohsumi | Getty Images News | Getty ImagesThe Bank of Japan has raised its policy rate by 25 basis points to 1.25%, the highest level since 1995. The move also marked a quickening in the BOJ's rate hike cycle since it started monetary policy normalization in March 2024, with the rise taking place three months from the BOJ's last hike, as compared to six months previously.The decision was split 7-2, with board members Toichiro Asada and Ayano Sato dissenting from the hike. The duo are seen as reflationists and were appointed by Prime Minister Sanae Takaichi earlier this year.The rise in rate hikes was widely expected, with almost 90% of economists surveyed by CNBC expecting the 25-basis-point tightening. Those surveyed also correctly predicted the dissenters to the decision.In its statement, the BOJ said the move was because of a risk that inflation will deviate upward to beyond its 2% target.The central bank added that it aims to stabilize underlying inflation at "around 2%" so that price rises do not overshoot its target and adversely affect the Japanese economy...