The Bank of Japan raised interest rates to 1% for the first time in 30 years.

The Bank of Japan has raised its short-term policy interest rate to "about 1%", pushing borrowing costs to their highest level in 31 years as the country gradually adapts to a persistent inflation environment. The 0.25 percentage point rate hike was in line with widespread expectations, with analysts saying it marks a key milestone for the Bank of Japan's efforts to normalize monetary policy after years of ultra-low interest rates and deflation. The last time the Bank of Japan's policy rate reached 1% was in 1995, when the central bank was lowering borrowing costs following the bursting of the asset bubble in Japan at the end of the 1980s. Since pulling Japan out of negative interest rates in 2024, the Bank of Japan has raised rates twice in 2025. It is expected that the Bank will gradually tighten policy approximately every six months. Ahead of the decision on Tuesday, more and more economists were predicting that the Bank of Japan would raise rates at least once again in 2026. The move on Tuesday was announced after a two-day policy meeting of the Bank of Japan's Monetary Policy Committee. Due to Governor Haruhiko Kuroda being hospitalized last week for liver disease, the committee was reduced to eight members. Kuroda did not attend the meeting and did not participate in the vote. It is expected that he will return for the July meeting. This week's meeting was chaired by Deputy Governor Masayoshi Amamiya. The afternoon press conference will be hosted by another Deputy Governor, Masayuki Ueda, whose remarks will be closely watched to see how the Bank of Japan continues to assess the negative impact of the Iran war on the economy.