BOJ raises interest rate to 0.5%

BOJ raises interest rate to 0.5%

1. Interest rate hikes and decisions
- Bank of Japan raises short-term interest rate target to 0.5 percent.  
- The rate hike was at an expected level, adjusted to 0.5% from 0.25% previously.  
- The rate decision was passed with a vote of 8 vs 1, which Nakamura opposed.  
- Nakamura opposed the rate hike and called for further financial market review at the next meeting.  

2. economic and price outlook
- The Japanese economy is recovering slowly, but some weakness is emerging.  
- The forecast for real GDP growth for fiscal 2024 was revised down from 0.6% to 0.5%.  
- The core CPI growth rate for fiscal 2025 was 2.4%, up from a previous forecast of 1.9%.  
- The Bank of Japan expects inflation to remain above 2% between 2024 and 2026.  

3. Policy Direction and Risk
- The Bank of Japan will consider further rate hikes if economic and price forecasts materialize.  
- It is predicted that trends in the financial and foreign exchange markets will have a greater impact on prices than in the past.  
- Price risks are skewed upward in both 2024 and 2025, and economic activity risks remain balanced.  
- Financial conditions will remain relaxed and support economic activities will continue.  

4. market reaction
- After the announcement of the rate hike, the yen fell to 156.41 against the dollar.  
- The global financial market is stable, and the possibility of realizing the Japanese economic outlook is increasing.