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BOJ raises short-term interest rates to 0.5% in widely expected move

BY Reuters | ECONOMIC | 01/23/25 10:29 PM EST

TOKYO, Jan 24 (Reuters) - The Bank of Japan raised interest rates on Friday in a widely expected move, reflecting its growing optimism that wages will continue rising and keep inflation sustainably around its 2% target.

The board decided to raise the BOJ's short-term policy rate to 0.5% from 0.25% by an 8-1 vote. Board member Toyoaki Nakamura dissented to the decision.

BOJ Governor Kazuo Ueda is scheduled to hold a press conference at 3:30 p.m. (0630 GMT) to explain the policy decision. (Reporting by Leika Kihara, Makiko Yamazaki, Kantaro Komiya and Satoshi Sugiyama Editing by Chang-Ran Kim)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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