Bank of Japan raises policy rate to 1.25% and signals continued tightening
On September 18, 2026, the Bank of Japan raised its short-term policy-rate target from 1.00% to 1.25%, a 25-basis-point increase approved by a 7-2 vote. The decision took the policy rate to a level described as a roughly three-decade high, and the BOJ said it intends to keep tightening as economic activity and price trends evolve, subject to prevailing financial conditions.
This is a concrete central-bank policy decision with clear forward implications for Japanese interest rates, the yen, domestic financial institutions, leveraged real estate, insurers, exporters and importers. The Bank of Japan raised its short-term policy-rate target by 25 basis points from 1.00% to 1.25% and communicated an intention to continue tightening depending on economic activity, price trends and financial conditions. The hike itself was widely anticipated, with contemporaneous reporting indicating that the forecast was 1.25%, so the surprise score is low despite the decision's high materiality. The description uses "about three decades" rather than choosing between conflicting 30-year and 31-year descriptions in the source material. The occurrence time is estimated at approximately 02:54 UTC on September 18, based on timestamped alerts reporting the decision; the exact official announcement timestamp is not provided. Approved stakeholders are limited to companies with a documented domestic-rate, JGB-duration, foreign-exchange translation, import-cost or other clear transmission channel; weaker mixed retail exposure and indirect derivatives-volume exposure were excluded.
Earlier on Friday, the Bank of Japan raised its benchmark interest rate to a 30-year-high to 1.25% and signaled that further increases are likely.
the central bank raised its benchmark interest rate to the highest level since 1995.
the central bank accelerated the pace of tightening in its current cycle, raising the policy rate to 1.25% from 1.0% amid mounting concerns over price pressures from the Middle East energy shock, exacerbated by yen weakness.
"The policy shift reflects a transition as Japan's underlying inflation approaches 2% after hovering below that mark, with the goal of monetary policy now being to anchor inflation around 2%," he said.
The central bank lifted interest rates by a quarter point to 1.25%.
BOJ steps up rate hikes, while path for further tightening remains unclear - KYODO