The global interest rate rising cycle has spun again today, after the Bank of Japan decided to raise interest rates to their highest level in 31 years.
The BoJ voted to raise its target interest rate by a quarter of one percentage point to 1.25%, the highest level since 1995. The vote was not unanimous – with two board members dissenting to the increase.
The move meant the BoJ has joined the US Federal Reserve and the European Central Bank in tightening monetary policy this month, as part of the global fight against inflation.
However, the Bank of England is, so far, resisting joining the battle, having yesterday voted to leave UK interest rates on hold at 3.75%.
The BoJ has been in a rate-rising cycle since 2024, when it lifted its policy rate out of negative territory. It has been under pressure to raise borrowing costs as the yen weakened steadily against the dollar this year, to levels that prompted policymakers to intervene to stabilise the currency.
A rise today had been expected, so the news that two BoJ policymakers opposed the move has excited the markets.
Despite the inflationary squeeze on households, retail sales across Great Britain have risen over the summer.
The heatwave, a pickup in web shopping and the joys (and pain and disappointment) of the men’s football World Cup, helped to lift spending over the three months to August, data shows.
Retail sales volumes rose by 0.9% in the June-August quarter, the Office for National Statistics has reported this morning.
Non-store retailers’ sales volumes rose after a particularly strong June period – perhaps because people preferred to order goods online rather than braving the high street in the heatwave.
Retailers selling alcohol and beverages performed well across all three months to August, which they attributed to promotions, the hot weather and the World Cup.
In August alone, retail sales volumes rose by 0.5%, reversing a 0.5% drop in July.
August’s rise is unexpected (economists had forecast a 0.2% fall), so this is the latest piece of economic data to beat expectations after last week’s jump in UK GDP.
Today’s key events
• 10am BST: eurozone construction output for July
We’ll be tracking all the main events throughout the day on our business live blog …
