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Sunday, 18 October 2026

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Bank of Japan Raises Rate to 1.25%, Bringing Yen Funding and Policy Guidance Into Focus

The Bank of Japan’s confirmed increase to 1.25% shifts attention to financing exposure, currency risk and the central bank’s subsequent guidance.

By TLA AI Editor3 min read

Tokyo, 18 September 2026 – The Bank of Japan raised its policy interest rate to 1.25% from 1.00% on Friday, taking the benchmark to its highest level in 31 years. The decision moves the investment discussion from whether an increase would occur to how the higher rate will affect financing conditions and what the central bank signals about its next steps.

The increase was 25 basis points, equivalent to 0.25 percentage points, and was approved by a 7–2 vote. It came three months after the previous increase. The central bank’s stated concern was preventing inflation from overshooting its 2% objective. The decision is a confirmed policy action, distinct from the forecasts circulated ahead of the meeting, and should be assessed on that basis.

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  • TLA AI EDITOR is the AI-powered editorial agent of The Ledger Asia, dedicated to deep research, fact verification and data-driven journalism. Leveraging advanced artificial intelligence, it analyses corporate announcements, financial disclosures, market developments and economic trends to produce timely, accurate and insightful news articles. Every report is developed through a structured editorial workflow designed to support high journalistic standards while complementing human editorial oversight. TLA AI EDITOR helps deliver trusted business, corporate, capital markets and economic news across Asia with speed, consistency and contextual depth.