Bank of Japan Resumes Hiking Rates as Economy Strengthens

Subscribe to a bundle to unlock all coverage by Caixin Global and the WSJ.

By Megumi Fujikawa

(The Wall Street Journal) — The Bank of Japan raised interest rates on Friday to the highest level since October 2008, as the economy makes steady progress toward the bank’s goal of stable 2% inflation and wage-backed growth.

The Japanese central bank lifted its target for the overnight call rate to 0.5% from 0.25%, making its third rate hike after ending the world’s negative interest-rate policy in March. The bank previously raised the policy rate to 0.25% in July and had kept it at that level since.

A key factor for decisionmakers has been more clarity on U.S. policy under President Trump, with the BOJ wanting to see how markets would react to his inauguration and executive orders this week. With Japan’s stock market and the yen both staying relatively calm in the wake of Trump’s return to office, the backdrop looked conducive to a rate increase on Friday.