Japan’s central bank, the Bank of Japan, raised its policy interest rate to 1%, the highest level in over 30 years, marking a continued shift away from decades of ultra-loose monetary policy.

The decision, which was widely expected, passed with strong support among board members and follows earlier rate increases as part of ongoing policy normalization.

Officials cited rising inflation pressures, including higher energy costs and global factors linked to oil supply concerns, as reasons for tightening.

Financial markets reacted modestly, with the yen strengthening slightly and Japanese stocks edging higher, CNBC has reported.

The bank also signaled continued reductions in government bond purchases while monitoring inflation trends and global economic risks.