Bank of Japan increases benchmark interest rate to 1.25% to combat inflation pressures

On September 18, 2026, Japan's central bank raised its benchmark interest rate from 1.0% to 1.25%, the highest in 31 years. This decision was made to combat rising inflation driven by high energy prices, particularly due to the ongoing war in Iran. The move aligns with global trends as other central banks also increase rates to address inflationary pressures.