Bank of Japan ups rates to 31-year high

The Bank of Japan raised interest rates to a 31-year high on Friday and signalled its readiness to keep pushing up borrowing costs, joining other major central banks in fighting persistent inflation pressures driven by soaring oil costs. The widely expected move, which was the first hike in three months, takes interest rates closer to levels the central bank deems neutral to the economy, marking another step away from decades of ultra-low rates that cemented the yen's status as a cheap global funding currency. It follows rate hikes by its European and US peers, highlighting central bank's focus on global inflation risks caused by the Iran war-induced energy cost spike, expansionary fiscal policies and surging demand for AI investment. At the two-day meeting ending on Friday, the bank raised its policy rate to 1.25 percent from one percent by a 7-2 vote. Doveish board members Toichiro Asada and Ayano Sato were the dissenters. "Wholesale inflation remains elevated and price pressures from business-to-business trading has started to spill over into consumer prices," the bank said in a statement announcing the decision. "Underlying inflation has been approaching two percent" as companies continue to pass on the cost of higher wages and inflation expectations keep heightening, it said. While...