TOKYO (dpa-AFX) - The Bank of Japan raised its short-term interest rate to the highest in seventeen years on Friday as expected, aiming for a sustainable and stable achievement of the price stability target of 2.0 percent amidst rising wages.
At the policy board meeting, members voted 8-1 to raise the uncollateralized overnight call rate to around 0.5 percent from 0.25 percent. This was the highest since the global financial crisis in 2008.
The BoJ had ended its negative interest rate policy in March and last lifted the interest rate in July to 0.25 percent.
The decision was motivated by the momentum behind increased wages and the ongoing rise in inflation.
The central bank has hinted at the possibility of additional interest rate increases while highlighting its intention to exercise utmost caution in order to ensure that the economy remains stable.
'Real interest rates are expected to remain significantly negative after the change in the policy interest rate, and accommodative financial conditions will continue to firmly support economic activity,' the BoJ said.
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