Bank of Japan Lifts Rates to 31-Year High, Sealing a Week of Tightening
Japan raised its policy rate a quarter-point to 1.25% — the highest since 1995, on a 7–2 vote — citing the inflation risk from soaring oil, with Governor Ueda declaring policy had “entered a new phase”. It completed an extraordinary week: the Federal Reserve’s first rise in over three years on Wednesday, the Bank of England’s conditional hold on Thursday, Tokyo’s move on Friday. The yen fell regardless, markets reading Mr Ueda as gentler than his headline.
Three decades of Japanese monetary exceptionalism are ending to the rhythm of a Middle Eastern war: the country that spent a generation fighting deflation is now hiking against imported energy inflation like everyone else, and “a new phase” from Mr Ueda is as close to a regime declaration as that institution issues. The global significance is the synchronisation — when the world’s three largest developed-market central banks tighten in one week, the tide goes out on every leveraged position built in the cheap-money decade, and the yen’s perverse fall shows markets still testing Tokyo’s resolve. For Britain the read-across is competitive: the Bank of England’s hold now stands alone. Watch Japanese life insurers’ behaviour — their repatriation flows move gilt and Treasury yields more than most policy speeches.