The Bank of Japan raised its short-term policy rate to 1% from 0.75%, the highest level since 1995, citing faster pass-through from crude oil prices.

How this affects you

Japan's move to raise interest rates to a 31-year high, driven by rising energy costs from the West Asia conflict, signals a significant shift away from its ultra-loose monetary policy and could lead to higher borrowing costs across the economy. This decision, approved by a 7-1 vote, reflects concerns that oil-led cost pressures could push inflation above target, with analysts expecting further gradual hikes and potentially impacting global central bank strategies.