The yen strengthened and Japanese government bond yields rose to fresh multi-year highs on Friday after the Bank of Japan hiked interest rates as expected and raised its inflation forecasts.

The Bank of Japan (BoJ) has raised its key short-term interest rate by 25 basis points to 0.5%, marking the highest level since 2008.

Setting rates in Japan will become a delicate balancing act if tariffs materialize.

The Bank of Japan has raised short-term interest rates by a quarter point, the highest in 17 years, signalling efforts to normalise monetary policy in response to persistent inflation and increasing wages.

The Bank of Japan delivered a widely expected 25 basis point hike to its key lending rate on Friday, bringing the overnight call rate to the highest since 2008 and putting pressure on the dollar. The ICE Dollar Index slipped 0.

The Bank of Japan raised interest rates on Friday to their highest since the 2008 global financial crisis and revised up its inflation forecasts, underscoring its confidence that rising wages will keep inflation stable around its 2% target.

The Bank of Japan hiked interest rates to 0.5%, the highest level since October 2008, and pledged to raise rates further if the economy and inflation continue in line with projections. The bank’s pledge to seek more rate hikes sent Japanese government bond yields higher and boosted the yen.

Top News Bank of Japan Resumes Hiking Rates as Economy Strengthens The Bank of Japan raised its target for the overnight call rate to 0.5% from 0.25%, making its third rate hike since ending its long-running negative interest-rate policy in March. The bank previously raised the policy rate to 0.25% in July and had kept it at that level since.

Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.

The Bank of Japan has raised its interest rates by 25 basis points, signifying the end of an era of historically low interest rates.

The pace of interest rate cuts has been the focus for much of the world, but in Japan, things are going in the opposite direction. The BOJ just hiked its key policy rate to its highest level in 17 years,