Japan’s central bank hikes interest rates 25 bps to a 17-year-high; Yen surges 0.7% against US dollar
Bank of Japan increased its interest rates by 25 basis points to 0.5 per cent, the highest since 2008. Yen was trading higher than the dollar in Friday's currency market, fueled by the inline expectations of the Japanese central bank, reported AFP.
The Japanese central bank, Bank of Japan, announced on Friday, January 24 that they have increased the key benchmark interest rates of the country by 25-basis-point rise to 0.5 per cent as the economy follows BOJ expectations growth, reported the news agency AFP.
The Bank of Japan's decision to increase the interest rates to 0.5 per cent indicates that the Japanese economy is developing according to the expectations after the high inflation reading; this rate hike fueled the Yen to trade higher against the dollar on Friday.
The interest rates are the highest since 2008, observed the news agency, supported by the “steadily” rising wages and financial markets being “stable on the whole” as per the BOJ statement.
“Japan's economic activity and prices have been developing generally in line with the Bank's outlook, and the likelihood of realising the outlook has been rising,” said the Bank of Japan in the official statement, cited the news agency.
BOJ's Outlook?
According to the news report citing BOJ's Chief Kazuo Ueda, the outlook for the Japanese economy is met, and the central bank will “accordingly continue to raise the policy interest rate” to adjust the monetary accommodation in the economy.
Kazuo Ueda mentioned in a news conference that the “pace and timing” of the future rate hikes is yet to be decided.
“We would like to make a decision after we have studied the impact of this rate hike,” said the BOJ Chief cited in the agency report.
Yen hike against US Dollar
The move from the Japanese central bank fueled the Yen 0.7 per cent higher against the US dollar to 154.84 Yen.
Bank of Japan remains an outlier on rate hikes, as other economy central banks have increased their rates and then started cutting again in 2024. According to the news agency, the interest rates increase in March, followed by an increase in July, caught the investors off-guard and sparked tension in the global equity and currency markets.
75 per cent of the economists cited by the news agency expected more rate cute and their reaction to the rate cut was muted on Friday, January 24.
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Business NewsEconomyJapan’s central bank hikes interest rates 25 bps to a 17-year-high; Yen surges 0.7% against US dollar
First Published:24 Jan 2025, 02:45 PM IST
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