The Bank of Japan (BOJ) on Friday raised its benchmark interest rate by 25 basis points to 0.75 percent, its highest level in three decades, after a two-day monetary policy meeting.
The move marks the first rate hike since January and also the first under the administration of Prime Minister Sanae Takaichi, who advocated an aggressive fiscal policy and monetary easing.
The rate hike is part of the central bank's latest step towards monetary normalization after the BOJ ended its negative interest rate policy in March 2024. The central bank raised its policy rate in July 2024 and again in January.
Since Takaichi took office, the yen has sharply depreciated amid concerns that her expansionary policy would further deteriorate Japan's fiscal health, prompting the selling of the currency and government bonds. The yield on the benchmark newly issued 10-year government bond -- a key indicator of long-term interest rates -- is edging closer to 2 percent.
Market expectations for further rate hikes have intensified as Japan continues to grapple with persistent inflation and negative real interest rates.
Bank of Japan raises interest rate to 30-year high
Bank of Japan raises interest rate to 30-year high
Bank of Japan raises interest rate to 30-year high
The African Union (AU) and its partners have warned that the ongoing Middle East conflict poses a "serious risk" to African economies.
In a recent joint policy brief, the AU, the United Nations (UN) Economic Commission for Africa, the African Development Bank, and the UN Development Program warned that the longer the conflict lasts and the more severe the disruption of shipping routes, energy, and fertilizer supplies, the greater the risk of a significant growth slowdown across Africa.
With most African countries still growing at rates below pre-COVID levels, the brief projected a 0.2 percentage-point decline in Africa's gross domestic product growth in 2026 if the conflict lasts more than six months.
The organizations stressed that the conflict, which has already triggered a trade shock, could quickly become a "cost-of-living crisis" due to higher fuel and food prices. Rising shipping costs, insurance premiums, exchange rate pressures, and tighter fiscal conditions could further compound the crisis, with vulnerable households bearing the heaviest burden.
The Middle East accounts for 15.8 percent of Africa's imports and 10.9 percent of its exports, underscoring the critical implications of the current situation for African economies, according to the brief.
Highlighting that the fertilizer channel may prove more consequential than oil shocks for some countries, the brief noted that disruptions to Gulf liquid natural gas supply would affect ammonia and urea production, raising fertilizer costs during the crucial March-to-May planting season.
It warned that the phenomenon will put further upward pressure on food prices and hit vulnerable households hardest, with significant negative impacts on food security in Africa.
Expressing concern over potential geopolitical spillover effects that could reshape Africa's security, it also warned that a wider conflict could intensify competition for influence in Africa, with regional conflicts in Sudan, Somalia, and Libya already reflecting external sponsorship.
The brief emphasized the importance of strengthening energy security, safeguarding and restoring fiscal space, accelerating the implementation of the African Continental Free Trade Area, and establishing financial safety nets across Africa as essential strategies for building resilience.
African leading organizations warn Middle East conflict poses "serious risk" to African economies
