Bank of Japan Raises Policy Rate to 1%, Highest Since 1995

The Bank of Japan raised its policy rate by 25 basis points to 1.00% on June 16, 2026, the highest level since September 1995, in a 7-1 vote with board member Toichiro Asada dissenting in favor of holding rates and citing downside risks to production and employment. The move continues the BOJ's gradual exit from decades of ultra-loose monetary policy, driven by persistent yen weakness and inflation running above the 2% target — partly fueled by energy price spikes tied to the Iran war. The Bank signaled further hikes are likely, with one board member envisioning quarterly 25-basis-point increases toward a 2% neutral rate.