Bank of Japan Raises Rate to 31-Year High

The Bank of Japan raised its benchmark interest rate by 0.25 percentage points to 1.25%, the highest level since 1995, as it seeks to contain inflation, support the yen and prevent prices from exceeding its 2% target. The decision accelerated the central bank’s normalization cycle and officials signaled that additional increases could follow, although two policymakers dissented, arguing that economic and price conditions did not yet warrant tighter policy. The move could have wider global effects because Japanese investors hold roughly $2.5 trillion in U.S. stocks, bonds and other overseas financial assets. For India, existing JICA infrastructure loans with fixed rates—such as financing for the Mumbai-Ahmedabad High-Speed Rail project—should generally be unaffected, while newer floating-rate loans tied to TORF plus 80 basis points, including Bengaluru Metro Phase 3 and Mumbai Metro Line 11, could become more expensive over time.