Bank of Japan (BoJ) raised interest rate for the first time in almost six years as a decade-long bout of deflation ended, and the economy heads toward its longest post-war expansion.BoJ Governor Toshihiko Fukui and his policy-board colleagues increased the key overnight rate between banks to 0.25% from almost zero, the bank said today.The end to the zero-rate policy is a recognition of plans by Japanese companies like Toshiba to invest at the fastest pace in 16 years after closing factories and slashing debt built up during the bubble economy of the 1980s.The yen fell earlier today on speculation Fukui will signal borrowing costs will remain low to protect an economy that has had just seven consecutive months of inflation.Sixteen central banks raised borrowing costs in June as record oil and metal prices hiked inflation. The US Federal Reserve increased rates to 5.25% from 1% in June 2004. The European Central Bank lifted its key rate to 2.75%, its third increase since December.Japan's economy expanded for 53 months through the end of June, the longest since 57 months of growth from 1965 to 1970. The government forecasts the economy will expand 2.1% in the year ending March 31, 2007.
