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Bank of Japan raises rates to 1%, and will end tapering next year

Bank of Japan raises rates to 1%, and will end tapering next year

The Bank of Japan's recent decision to raise its benchmark rate by 25 basis points to 1%, while committing to halt tapering by April 2027, underscores a significant shift in its monetary policy amidst rising inflation concerns. Per the full note from ING, the 7-1 vote reflects a consensus within the central bank about inflationary pressures, despite dissent regarding downside risks to the economy. The immediate market reaction was mild, but a sustained hawkish tone from Deputy Governor Uchida indicates further tightening could be anticipated, contingent on global geopolitical developments, particularly regarding the Middle East.