The Bank of Japan has been trying to normalise monetary policy after decades of keeping interest rates near or below zero to try to encourage more borrowing and spending to counter deflation and pull Japan's economy out of the doldrums. Inflationary pressures are rising because of the war in Iran, which has sent oil prices soaring in recent months. That is a big negative for resource-poor Japan, which virtually imports all its oil.
The rate increase, coming at the end of the two-day monetary policy board meeting, was expected, widely figured into recent global markets.
