Japan’s central bank has announced an increase in key interest rates to 0.25% from the previous range of 0%-0.1%. This is the second time since 2007 that the central bank has raised interest rates. The U.S. Federal Reserve will announce its decision on interest rates later in the evening.
The Bank of Japan announced that it will reduce its monthly purchases of Japanese government bonds to about 3 trillion yen per month in the quarter from January to March 2026. This reduction will reduce the amount by about 400 billion yen each quarter, the BoJ added.
The Bank of Japan forecasts that the core inflation rate, excluding fresh food prices, will reach 2.5% by the end of fiscal 2024 and will hover around 2% in fiscal 2025 and 2026. The BoJ said it will continue to raise the interest rate and adjust the degree of monetary accommodation, depending on the realization of its economic outlook.
Fed expected to leave interest rates unchanged
Later in the evening, the US Federal Reserve will announce its fifth interest rate decision for 2024 after a two-day Federal Open Market Committee (FOMC) meeting. Wall Street expects the Fed to keep benchmark interest rates in a range of 5.25% to 5.50%.
However, market participants will be watching closely for any signs that could suggest a potential rate cut in September.
