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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.
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