Japan raises key interest rate for second time in past 17 years
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Update time : 2024-08-01 18:42:58
The Bank of Japan (BoJ) raised its key interest rate to 0.25% from the previous range of 0% to 0.1%, marking only the second increase in 17 years. This move is part of a broader strategy to normalize monetary policy and gradually unwind its extensive bond-buying program after a decade of economic stimulus.
The rate hike came just before key interest rate decisions by the US Federal Reserve and the Bank of England. The decision contrasts with recent economic data: Japan's economy contracted by an annualized 2.9% from January to March, and consumer prices increased by a less-than-expected 2.6% in June from a year earlier.
Despite these challenges, the BoJ's move signals a shift towards tighter policy, with further rate hikes expected early next year. The BoJ's previous rate increase in March ended a period of negative interest rates, a tool used during the pandemic to stimulate spending and counter economic downturns.
