The Bank of Japan raised its benchmark rate by a quarter-point on Thursday as inflation remains stubbornly above the target.
The policy board decided to hike the uncollateralized overnight call rate to "around 0.75 percent" from "around 0.5 percent."
Previously, the BoJ had lifted the benchmark rate by 25 basis points in January.
Real interest rates are expected to remain significantly negative after the change in the policy rate, and accommodative financial conditions will continue to firmly support economic activity, the bank said.
If economic activity and prices develop as estimated in October, the BoJ will continue to raise the policy rate and adjust the degree of monetary accommodation, the bank said.
The possibility of CPI inflation to be at a level that is generally consistent with the price stability target of 2 percent in the second half of the projection period of the October 2025 Outlook report has been rising, the board noted.