Bank of Japan raises key interest rate to 1.25%, a 31-year high

The Bank of Japan announced an increase in its benchmark interest rate from 1 percent to 1.25 percent, pushing the rate to its highest level in 31 years.

The central bank said the move was aimed at countering rising inflation risks in the country. Officials pledged to continue taking steps to help control price increases and maintain economic stability.

The rate hike marks a further step away from the ultra-low interest rate policy Japan maintained for decades in an effort to stimulate its economy. In recent years, however, mounting inflationary pressure has prompted the central bank to gradually shift its approach.

The decision is expected to affect borrowing costs and broader financial markets across Japan. A higher benchmark rate typically makes loans more expensive for businesses and consumers, but can also help curb long-term price growth.

The Bank of Japan said it would continue monitoring inflation trends and take further monetary policy action if necessary.