BOJ lifts rates to 31-year high, pivots towards preemptive inflation fight - Reuters

The Bank of Japan has raised interest rates to their highest level in 31 years, according to Reuters, marking a shift toward preemptively addressing inflation rather than reacting to it after the fact. The move signals that Japanese policymakers now see sustained price pressure as a enough of a risk to justify tighter monetary conditions, even as the economy continues to recover.

For markets, the decision matters because Japan has long been an outlier among major economies, keeping borrowing costs ultra-low while others tightened. Higher Japanese rates can influence global bond yields, the yen's value, and cross-border capital flows, particularly in carry trades that rely on cheap yen funding. A stronger yen or rising Japanese yields may ripple into currency and fixed-income markets worldwide.

What to watch: the BOJ's guidance on the pace of future increases, upcoming inflation and wage data, and how the yen and Japanese government bond yields respond. These signals will shape expectations for how far this tightening cycle may run.