Japan raises interest rates to 31-year high to curb impact of rising prices

AI desk brief

The Bank of Japan raised its policy rate to 1.25%, the highest since 1995, as it joined the Fed and ECB in tightening amid inflation pressures tied to the Iran war. The yen weakened about 0.7% against the dollar, while Japan’s two-year yields fell 4bp to 1.82% after the decision; two board members dissented, underscoring uncertainty over how far the BoJ can go.

For metals, the near-term read is mixed to slightly bearish: higher global policy rates and firmer U.S.-dollar support from a weaker yen can pressure gold and silver, though the geopolitical inflation backdrop and crude volatility continue to underpin safe-haven demand. Brent also fell as much as 1.5% to $103.29/bbl on expectations of alternative Middle East supply routes, reducing some inflation urgency.