The Bank of Japan has raised its main interest rate to 1%, marking the highest level since 1995, amid rising global energy prices.

Context

This decision follows a trend among central banks responding to inflationary pressures linked to global events, including the Iran war.S2

Key points

• The interest rate increase is the first since 1995.S1

• The new policy rate is set at 1%, up from 0.75%.S2

• The decision was influenced by a surge in global energy prices.S2

• Central bank deputy Shinichi Uchida will lead the press conference following the decision.S1

• The rate hike aligns with actions taken by other central banks this year.S2

• The increase aims to address inflationary pressures in the economy.S2

• Kazuo Ueda, the central bank chief, was hospitalized prior to the announcement.S1

• The move reflects ongoing economic adjustments in response to global market conditions.S2

Why it matters

• Raising interest rates can help control inflation but may also slow economic growth.S2

• This decision signals a shift in Japan's long-standing low-interest-rate policy.S1

• The rate hike may impact consumer borrowing and spending in Japan.S2

What to watch

• Monitor the economic impact of the rate increase on Japan's economy.S2

• Watch for reactions from global markets in response to Japan's policy change.S1

• Follow updates on the health status of Kazuo Ueda and its implications for the central bank's leadership.S1