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Major central banks have hiked their policy rates in the face of surging inflation since the Covid-19 pandemic — but the Bank of Japan has been an outlier.
It has stayed put despite headline and core inflation running above its target of 2% since April 2022, and despite headline inflation’s two-year high of 4% in January. So-called “core-core” inflation has run above the target since October 2022.
The BOJ has raised rates by just 60 basis points in the 14 months since March 2024, when it abandoned its negative interest rate policy. It held its policy rate at 0.5% in its most recent policy meeting in June, saying that “underlying CPI inflation is likely to be sluggish, mainly due to the deceleration in the economy.”
The U.S. Federal Reserve raised rates for the first time since 2018 in March 2022, and every major central bank except the BOJ raised rates that year.
