Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The inflationary consequences of the US-Iran war continue to ripple across the global economy, even though the US and Iran have agreed a memorandum of understanding (MOU) to end their conflict.

With price pressures rising, the Bank of Japan has raised interest rates to a 31-year high today, becoming the second G7 bank – after the European Central Bank – to hike borrowing costs since the Iran war began.

Policymakers in Tokyo raised the BoJ’s short-term policy rate to 1% from 0.75%, taking borrowing costs to levels lase seen in 1995.

The BoJ said it was taking action because companies were passing on rising oil costs to each other at a “relatively fast pace.” That could lead to a rise in consumer prices across a wide range of items, it said.

It acted despite yesterday’s 4.75% drop in the oil price.

Encouragingly, the BoJ also said the risk of Japan’s economy deteriorating sharply from the Middle East conflict has diminished. It cited the government’s relief package to help households facing high fuel costs.

The agenda

• 9.45am BST: Treasury select committee hearing on the Office for Budget Responsibility

• 10am BST: ZEW economic sentiment index

• 1.30pm BST: US housing starts and business permits data