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BOJ Raises Rates to 1.25%, Governor Ueda Signals Policy Shift
The Bank of Japan increased its policy rate to 1.25%, marking a decisive shift from its long-standing ultra-loose monetary stance. Governor Kazuo Ueda stated the move reflects a new phase in policy, driven by sustained inflation and wage growth. This…
The Bank of Japan (BOJ) has elevated its benchmark interest rate to 1.25%, a move its Governor Kazuo Ueda characterized as a transition into a new policy phase. This decision, announced on September 18, 2026, represents a further step away from the prolonged period of accommodative monetary policy that characterized Japan's economy for decades.
Governor Ueda emphasized that the central bank is no longer in a phase of experimenting with policy adjustments. Instead, the BOJ is now responding to clear economic signals, including persistent inflation and robust wage growth. This shift implies a more conventional approach to monetary policy, aligning the BOJ more closely with other major central banks globally.
The rate hike, following previous increments, reflects the BOJ’s confidence in the sustainability of domestic price increases. Investors will now monitor the BOJ's forward guidance for further clues on the pace and magnitude of future rate adjustments, as Japan navigates this new landscape of rising borrowing costs and a strengthening yen.
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