Japan raises interest rate to highest since 1995

"Even if the situation remains unclear, should it be judged that upside risks to prices outweigh downside risks to economic activity, it will be necessary to thoroughly discuss the pros and cons of raising the policy interest rate," Ueda earlier this month.Prime Minister Sanae Takaichi, known for her support of boosting spending in the country, has previously dismissed the idea of hiking interest rates, though she is under pressure to bring down Japan's inflation.However, she has not publicly criticised the BOJ's push for higher rates since taking office last year.The latest rate rise is the second since Takaichi took office, and had been expected since the BOJ raised its policy rate to "around 0.75%" in December.The decision to raise rates also comes as the bank aims to stabilise the yen, which has come under pressure from other major currencies like the US dollar and the euro."There has been a sense that the yen is too cheap and that raising its currency will not hurt," said University of California San Diego business professor Ulrike Schaede.Even with the hike, Japan's interest rate remains low compared to other big economies.The US and UK, for example, currently have interest rates of above 3%, although both central banks are expected to keep their rates on hold when they meet this week.