Bank Of Japan Raises Key Interest Rate

(RTTNews) - The Bank of Japan raised its benchmark rate by 15 basis points and also announced its plan to reduce bond purchases.

The policy board voted 7-2 to lift the uncollateralized overnight call rate to around 0.25 percent.

In a unanimous vote, the board decided to reduce the amount of its monthly outright purchase of government bonds to around JPY 3 trillion by the first quarter of 2026.

The central bank expects 2.5 percent inflation for the fiscal 2024, which was down from 2.8 percent projected in April. The BoJ said the new forecast is lower mainly because of measures taken by the government to push down energy prices.

Meanwhile, the outlook for 2025 was lifted to 2.1 percent from 1.9 percent. The fiscal 2026 inflation forecast was retained at 1.9 percent.

Due to the statistical revision to the GDP figures for the fiscal 2023, the bank downgraded its growth outlook for the fiscal 2024 to 0.6 percent from 0.8 percent. Projections for both the fiscal 2025 and 2026 were maintained at 1.0 percent.