The Bank of Japan has raised its benchmark interest rate to 1%, its highest level since 1995.
Japan’s central bank increased the rate by a quarter of a percentage point from 0.75% and cited challenges stemming from a weak Japanese yen and higher energy prices.
The news came on the same day Australia’s Reserve Bank elected to keep its official cash rate unchanged at 4.35%.
BoJ normalising policy
The BoJ has been trying to normalise monetary policy after decades of keeping rates near or below zero.
The BoJ had adopted ultra-low rates to try to encourage more borrowing and spending to counter deflation and pull Japan's economy out of the doldrums.
Inflationary pressures due to the war in Iran, which has sent oil prices soaring in recent months, have hit Japan hard since it imports almost all its oil and gas.
Low interest rates had added to pressure on the Japanese yen, which has fallen to about 160 yen to the US dollar - a multi-decade low.
BoJ governor Kazuo Ueda, who was recently hospitalised, did not attend Tuesday's policy board meeting.
The Associated Press
