Tokyo, June 16 (QNA) - The Bank of Japan raised its key policy rate to a 31-year high of 1.0 percent on Tuesday following a two-day policy meeting, aimed at containing rising inflation risks stemming from elevated crude oil prices due to the Middle East conflict and the weak yen.

According to Kyodo News, the central bank raised the short-term interest rate from 0.75 % in its first hike since December. It also announced that it would slow the pace of reductions in Japanese government bond purchases from April 2027, while maintaining the current pace of reducing them by about 200 billion yen every quarter through March 2027.

The decision reflects the Bank of Japan’s ongoing shift toward normalizing monetary policy after years of monetary easing, as inflationary pressures continue due to rising energy costs and the depreciation of the yen.

Japan’s wholesale prices rose 6.3% year-on-year in May, the fastest rate of growth in more than three years, reinforcing expectations that inflationary pressures will persist in the coming period. (QNA)