JAKARTA - The Bank of Japan (BoJ) announced an increase in interest rates from 0.25% to 0.5%. This increase is the highest since 2008 or 17 years ago, when the global crisis hit the world.

The interest rate hike carried out by the Japanese central bank, made the Yen exchange rate to strengthen 0.5% to 155.32 per US Dollar (US). In addition, the interest rate hike also pushed the yield on Japanese government bonds for 2-year tenors up to 0.70%.

Kazuo Ueda, Governor of the BoJ, admitted that the recent weakening of the yen against the US dollar has put pressure on import prices. Therefore, Ueda said, interest rates need to be raised for now and in the future. However, he could not confirm when the BoJ would raise its benchmark interest rate again.

‘We don't know for sure when the right time is,’ Ueda said at a press conference, as quoted by Reuters on Friday (24/1) yesterday.

BoJ also said that this interest rate hike shows Japan's determination to increase interest rates to the 1% range slowly. The interest rate position at around 1% is considered a balanced level, so as not to suppress the economy and trigger excessive inflation. (KR/LM)