The BOJ raised its policy rate by 25 basis points to 1.0%, the highest since 1995, while pausing bond purchase tapering from 2027.
The Bank of Japan increased its policy rate by 25 basis points to 1.0%, marking the highest level in over 30 years. The move reflects growing inflation pressures and a diminished risk of economic slowdown, with policymakers signaling potential further hikes ahead.
USD remained largely unchanged against major currencies, with EURUSD, USDJPY, and GBPUSD trading within 0.04% of prior levels. Ranges stayed tight, with all three pairs moving less than 40 pips on the day. The BOJ also announced it will fix monthly Japanese government bond purchases at ¥2 trillion starting April 2027, halting further tapering.
The BOJ noted faster-than-expected pass-through of higher oil prices into consumer costs and warned of upside inflation risks. Despite the hawkish rate move, the decision to pause tapering may limit upward pressure on long-term yields.