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Bank of Japan raises interest rates to a 31-year high as Iran war drives global inflation surge

From the Newshound archive · first published 19 September 2026.

Bank of Japan raises interest rates to a 31-year high as Iran war drives global inflation surge

Japan's central bank has lifted its benchmark rate from 1% to 1.25%, the highest level since 1995, joining the US Federal Reserve and the European Central Bank in tightening monetary policy this month. The hike comes as central banks worldwide scramble to contain inflation stoked by rising energy prices linked to the Iran war. Governor Kazuo Ueda warned that underlying inflation risks overshooting the 2% target as firms grow more aggressive on wages and prices.

The BoJ has now hiked rates six times since 2024, when it started from minus 0.1%, with this latest increase coming THREE MONTHS after the previous hike — half the usual interval.

Two board members, Toichiro Asada and Ayano Sato — both appointed by Prime Minister Sanae Takaichi — dissented, arguing economic conditions did not yet justify the move.

The Bank of England on Thursday kept UK rates unchanged at 3.75%, cautioning that Iran war fallout could force them higher before long — a signal that left British mortgage holders on alert.

MoreThe GuardianJapan raises interest rates to 31-year high to curb impact of rising pricesWSJJapan’s Central Bank Picks Up Pace of Tightening With Rate Hike - WSJReutersInvestors react to BOJ raising interest rates to 31-year highAPJapan’s central bank raises benchmark interest rate to 1.25%Irish TimesBank of Japan raises rates to highest since 1995ABC News - Breaking News, Latest News and VideosJapan's central bank raises benchmark interest rate to 1.25% - ABC News - Breaking News, Latest News and VideosFXStreetBank of Japan raises interest rate by 25 bps to 1.25%, as expected - FXStreetAl JazeeraBank of Japan raises rates to 31-year high of 1.25% as inflation rises - Al JazeeraCNBCBank of Japan raises interest rates to 31-year high, flags concerns over inflation - CNBCThe New York TimesJapan Raises Interest Rates to 31-Year High Under U.S. Pressure - The New York TimesBBCJapan raises interest rate to new 31-year high to curb rising prices - BBCBloomberg.comWatch Japan Central Bank Hikes Rates, With Surprise Dissenters - Bloomberg.com
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