The Bank of Japan raised its overnight call rate target from 0.25% to 0.5% at its January 2025 policy meeting, lifting the benchmark to its highest level since the 2008 global financial crisis. The decision was taken by an 8-1 majority, with board member Toyoaki Nakamura dissenting because he wanted to confirm a rise in firms' earning power first, while the majority expressed confidence that Japan's economic conditions are developing in the direction policymakers have long sought to achieve.
The move was the first policy rate increase since July 2024. The Bank framed the January decision as reflecting progress toward its 2% inflation target, with wage growth feeding through into broader price pressures.