The Bank of Japan raised rates on Friday to their highest levels since the 2008 financial crisis, continuing a difficult march away from free money as the economy shows signs of recovery and inflation readings come in above target.
At a two-day policy meeting that ended Friday, the central bank voted to raise its short-term policy rate to 0.5% from 0.25%, in line with the consensus estimates of analysts and economists.
It is also in line with reports in the local press on Thursday evening, suggesting that the central bank continues to leak its rate decisions ahead of formal announcements.
The 25-basis-point move marks the first rate increase since July and takes rates to their highest level in 17 years.
Concerns about the first few days of the administration of U.S. President Donald Trump hung over the rate decision, but markets have been strong despite continued talk of tariffs and retaliation, allowing the central bank to tighten monetary policy without risk of causing turmoil.
BOJ Deputy Gov. Ryozo Himino said last week that the bank will make a decision by comprehensively analyzing the overall economic situation, adding that the U.S. economy is “one major factor.”
Another important factor, which the BOJ has repeatedly mentioned, is the need for confidence in wage-rise momentum going into annual spring-wage negotiations.
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