Bank of Japan raises key interest rate to 1.25%

The Bank of Japan has decided to raise its key interest rate by a quarter percentage point to around 1.25 percent. That's the highest level in about 31 years. The central bank announced the increase on Friday as it wrapped up its two-day monetary policy meeting. It's the first increase in three months and marks an accelerating pace for rate hikes.

The BOJ had been raising rates roughly every six months. This rate hike was expected as the bank had signaled it would deal with the risk of sharp price increases. Governor Ueda Kazuo will give a news conference later in the day to explain the move and take questions.