Bank of Japan raises key policy rate to 0.75% to tame inflation and support the yen
BOJ lifts policy rate as inflation persists and the yen seeks strength; move signals steps toward policy normalization
TOKYO — The Bank of Japan raised its key policy rate to 0.75% on Dec. 18, 2025, in Tokyo, officials said, in a move aimed at taming inflation and supporting the yen. The decision was announced following a policy review by the bank's board, reflecting a shift in stance as the central bank weighs price stability against currency strength.
The move lifts the central bank's policy rate to 0.75%, signaling a shift toward tighter policy after years of ultra-loose settings. Officials stressed that the higher rate is intended to help tame inflation and support the yen as market conditions evolve and price pressures persist. The Bank of Japan did not provide a detailed timetable for further changes, but the decision underscores the bank's willingness to adjust policy to address evolving economic dynamics.
The Associated Press, via ABC News, reported the decision as part of its continuing coverage of global monetary policy and currency trends. Analysts and market observers will be watching for signals about the pace of any future tightening, potential impacts on borrowing costs, and the yen's value in the wake of the move. While the measure represents a notable tightening from the prior policy posture, officials indicated the bank remains data-dependent and prepared to adjust its stance as inflation dynamics evolve. The development is likely to influence financial conditions in Japan, including lending practices and consumer finance, as institutions recalibrate in response to the higher policy rate.