25 basis points is the move. Japan's central bank lifted its policy rate to 1.25%, from the prior implied level of 1.00%, citing inflation risks, and the increment matches the Federal Reserve's most recent step. Both central banks are now tightening at the same pace.
The arithmetic closes simply: 25 basis points added to 1.00% reaches 1.25%. What Japan's central bank attached to that number, inflation risk as the stated driver, is a shift in institutional language. The central bank spent most of the prior two decades treating deflation as the primary threat, holding rates near zero to encourage price growth. Citing inflation risk as the justification for a rate rise signals the institution believes the pressure is now running the other way.
The alignment with the Federal Reserve is the sharper dimension. When two of the world's largest central banks raise rates by the same increment, the global cost of capital tightens in step. That matters for commodity markets, which have long used yen-funded positions as a cheap way to carry exposure. At 1.25%, borrowing in yen costs more than it did near zero, narrowing the spread that made those trades work. The geopolitical read: synchronized tightening from Tokyo and Washington removes the divergence that commodity importers and exporters had been pricing into forward contracts.
The policy rate stands at 1.25%. The stated reason is inflation risk.