After a long period of stagnation, the return of inflation and wage growth is giving the Bank of Japan room to raise interest rates.

The Bank of Japan raised its key interest rate to about 0.5% from 0.25% Friday, noting that inflation is holding at a desirable target level. The decision by the central bank came at the end of a two-day policy board meeting in Tokyo.

The Bank of Japan is expected to raise interest rates on Friday to their highest levels since the 2008 global financial crisis, as a broad stocks rally worldwide calms policymakers' fears U.S. President Donald Trump's tariff threats could upend markets.

Japan’s consumer price growth picked up in December, adding to evidence of steady inflation just hours before the central bank announces its rate decision.

The Bank of Japan raised its short-term interest rate to the highest in seventeen years on Friday as expected, aiming for a