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06/17 03:08

BOJ Raises Benchmark Rate to 1%, Highest Since 1995, in Fifth Hike Since Negative Rate Exit

Nikkei Asia reported that the Bank of Japan on Tuesday raised its uncollateralized overnight call rate by 25 basis points to 1%, the highest level since 1995 and the central bank's fifth hike since it ended its negative interest rate policy in March 2024. Governor Kazuo Ueda was absent from the two-day board meeting due to hospitalization for an infected liver cyst; Deputy Governor Shinichi Uchida will hold the post-meeting press conference.
The decision, which markets had priced at 99% probability, follows an interim US-Iran peace deal expected to be signed Friday, as the Strait of Hormuz closure had stoked global inflation fears. The BOJ also said it will halt the tapering of Japanese government bond purchases from April 2027, maintaining monthly JGB buying at 2 trillion yen.
State Street's APAC economist Krishna Bhimavarapu called the 1% level "psychologically critical" and flagged upside risk to guidance, saying a second hike in Q4 2026 remains on the table.
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