Japan's central bank raised its key interest rate from 1 percent to 1.25 percent, the highest level since 1995, as it continues to move away from decades of ultra-low borrowing costs.

Japan's central bank raised its key interest rate from 1 percent to 1.25 percent, the highest level since 1995, as it continues to move away from decades of ultra-low borrowing costs.

Japan's central bank has raised interest rates six times since 2024 to deal with inflationary pressures, including rising energy costs linked to disruptions from the Iran war.

Japan also faces a weak yen, rising prices and a shrinking workforce.