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Bank of Japan Policymakers Show Support for Raising Interest Rates in June Meeting

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Bank of Japan policymakers discussed further rate hikes, with the board's majority supporting raising interest rates at their June 15-16 meeting, according to the central bank's Summary of Opinions released on Wednesday.

A large majority of policymakers believe that record-high oil prices and inflation pressures could push inflation above their 2% target.

To curb these risks, the BOJ raised its benchmark interest rate to 1.0% from 0.75% in a 7-1 vote. This pushes Japanese interest rates to their highest level since 1995.

The minutes also suggested the policymakers' confidence that Japan's economy has recovered moderately despite challenges from the recent Middle East war.

Policymakers indicated that strong AI-related demand, solid corporate profits, wage growth, and government support measures have helped reduce downside risks.

While higher energy costs continue to add pressure on the outlook, members said progress in securing alternative raw material supplies and easing concerns about supply disruptions had improved the economic situation.

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