The Bank of Japan raised its main interest rate to 0.25% from around zero to 0.1% on Wednesday to address the yen’s decline against the US dollar. The yen initially strengthened to 152.75 per dollar before slightly weakening to 153.17 after the decision. Tokyo share prices rose 0.2% to 38,612.30 following the announcement.
The central bank, which has maintained near-zero or negative rates for years to stimulate inflation and economic growth, also announced a reduction in its monthly asset purchases to about 3 trillion yen ($19 billion) for the January-March quarter of 2026. This follows the shift from a negative policy rate in March when the overnight call rate for banks was raised to 0.1% from minus 0.1%.
In the US, high interest rates have supported the dollar, with the Federal Reserve expected to hold its main rate steady after a policy meeting later on Wednesday. The Bank of England is also expected to announce a rate decision later in the day.
