Bank of Japan Raises Interest Rates to 31-Year High

Japan's central bank raised its key interest rate to 1.25% on Friday, September 18, 2026, the highest level in 31 years. Bank of Japan Governor Kazuo Ueda cited a shift in the policy phase as the reason for the increase, which is intended to curb rising prices.

The decision was not unanimous, and the split vote was seen by strategists as a bearish signal for the yen. After the announcement, the yen fell to a two-week low, while the dollar jumped about 1 yen to above 157 yen. Japan's Nikkei stock index climbed following the rate hike.