Japan’s central bank raises interest rate to 1.25%, the highest in 31 years

Japan’s central bank on Friday raised the benchmark interest rate to 1.25 per cent from 1.0 per cent, a 31-year-high. The Bank of Japan has been trying to normalise monetary policy after decades of keeping interest rates near or below zero to try to encourage more borrowing and spending to counter deflation and pull Japan’s economy out of the doldrums. The rate increase in the uncollateralised overnight call rate, a short-term rate, was expected at the end of the two-day monetary policy board meeting and has widely figured into recent global markets.