Bank of Japan Hikes Rate to 30-Year High, Yen Under Pressure
By Aboki Forex —
The Bank of Japan raised its uncollateralised overnight rate by a quarter point to 1.0 percent. That is the highest level in three decades. The move is part of a gradual shift away from years of ultra-loose policy.
For decades, the BOJ kept rates near or below zero to fight deflation and encourage borrowing. But rising global prices have changed the picture. The war in Iran has pushed oil costs higher, hitting Japan hard because the country imports nearly all its oil and gas.
The low rates also weakened the yen, which recently traded around 160 to the US dollar. That added to import costs and inflation pressures at home.
BOJ Governor Kazuo Ueda was hospitalised and missed Tuesday’s policy meeting. Deputy Governor Shinichi Uchida was expected to lead the post-decision news conference later in the day.
Before the rate decision, Tokyo’s Nikkei 225 briefly touched 70,000 points in early trading before giving up some gains.