Mumbai: Most of the banks of the world are in favor of reducing the interest rates, while the Bank of Japan on Friday increased the interest rate by five percent to 0.50 percent. This is the highest level of interest rates since the 2008 financial crisis.
The Bank of Japan wants to ease monetary policy in view of stable inflation and rising wages.
A statement issued by the Bank of Japan said that eight of the nine members of the Bank of Japan voted in favor of raising interest rates, while one member voted against the increase.
After this decision, the Japanese currency Yen became stronger against the dollar and was quoted around 155.12 per dollar.
It has been said in the statement that increasing the salary can increase inflation, keeping this in mind it has become necessary to increase the interest rate. Wages are expected to rise further in 2025 and Japanese policymakers are keeping an eye on it.
The statement further said that keeping in mind the increase in the profits of the companies and the tension in the labor market, most of the companies have indicated to increase the salaries in the current year also.
Inflation rate in Japan is increasing towards two percent.
Meanwhile, other central banks of the world including the Reserve Bank of India are moving towards reducing interest rates. The US Federal Reserve has hinted at cutting interest rates twice this year, while the RBI may cut the repo rate in the February meeting.
