Japan Raises Interest Rates to Highest Level Since 2008

[mahatmakanejeeves]

Japan Raises Interest Rates to Highest Level Since 2008
The return of inflation and wage growth is giving the Bank of Japan room to raise interest rates and declare the end of a long period of stagnation.

By River Akira Davis
Reporting from Tokyo
Published Jan. 23, 2025
Updated Jan. 24, 2025, 2:54 a.m. ET

In a number of ways, Japan’s economy seems to have gone back in time. ... Inflation and wage growth are mostly back where they were in the early 1990s, just before the spiral of price deflation and economic stagnation that became known as “the lost decades.”

That prompted the Bank of Japan on Friday to raise interest rates by a quarter point, to 0.5 percent, another step in its pivot away from the ultralow rates officials long used to try to jolt the economy back to life.

Friday’s increase, which brought rates to their highest level since 2008, was the third in just under a year, a pace of policy tightening not seen in Japan since 1989. After raising rates in March and July last year, the Bank of Japan had held steady at recent policy meetings as it waited to see whether the inauguration of President Trump would rattle markets.

As other major central banks move to cut the high interest rates they had used to curb inflation, Japan is, as usual, bucking the trend. After encouraging a period of rising prices, the Bank of Japan is just now raising rates above zero.

Economists say that with the return of inflation and positive interest rates, Japan is starting to resemble a more conventional economy.

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River Akira Davis covers Japan, including its economy and businesses, and is based in Tokyo. More about River Akira Davis

[dem4decades]

1. Trump's got this, our rates are going down to nothing. He's real smart.