BOJ Decides to Raise Interest Rates

Tokyo, Jan. 24 (Jiji Press)--The Bank of Japan decided to raise interest rates at its two-day monetary policy meeting that ended Friday, taking its policy rate to a level unseen in over 16 years.

The central bank judged that the wave of strong wage hikes is expected to continue in this year's "shunto" spring labor-management pay negotiations, reinforcing the country's virtuous cycle of rising wages and prices.

The BOJ's nine-member Policy Board decided by a vote of eight to one to raise its target for the unsecured overnight call rate, Japan's benchmark short-term interbank lending rate, to around 0.5 pct from around 0.25 pct.

It was the BOJ's first rate hike decision since last July and the third in the current tightening cycle since last March, when the central bank scrapped its negative interest rate policy.

The previous time the BOJ's policy rate stood at or above 0.5 pct was October 2008.

[Copyright The Jiji Press, Ltd.]