Bank of Japan raises interest rate to about 0.5%, citing higher wages and inflation
Associated PressJAN 22
Bank of Japan Raises Rates to Highest Level in 17 Years
Above: Bank of Japan Gov. Kazuo Ueda speaks during a news conference at the central bank's headquarters in Tokyo, Japan, on Friday, Jan. 24, 2025. Image copyright: Akio Kon/Bloomberg/Contributor via Getty Images
The Spin
Narrative A
The Bank of Japan has made good on its hawkish pledge, heading closer to the interest rates of other countries and creating room for conventional monetary policies in case of future economic events, as wage pressure has been confirmed. Now, it's crucial to find the right pace for further raises to avoid accelerating too much.
Narrative B
That the Bank of Japan has approved the largest hike in its benchmark rate in nearly two decades to raise it to its highest level since 2008 may sound hawkish, but a closer look at the figures reveal a dire prospect for Japan. While interest rates are now at 0.5% and 10-year bonds at 1.2%, inflation is about to double the 2% target.