The central bank raised rates by 25 basis points and signaled a halt to bond purchase reductions starting April 2027.
The Bank of Japan increased its policy rate to 1% in a 25-basis-point move, with one dissenting vote. The decision marks the first rate hike since March and reflects growing confidence in sustained inflation and wage growth.
The central bank also announced plans to end its bond tapering program by April 2027, though it did not specify the pace of reductions before then. The prior rate stood at 0.75%, with markets largely expecting a hike amid rising price pressures.
Future hikes will depend on geopolitical developments, particularly in the Middle East, with an October increase possible if a long-term peace deal materializes.