The Bank of Japan raised its policy interest rate by 0.25 percentage points to 1.25%, the highest level since 1995. The widely anticipated move marks a significant step in normalizing the country's monetary policy after decades of ultra-low rates.
Despite the rate hike, the yen weakened and Japanese stocks rallied. The policy board's 7-2 split vote was interpreted by investors as a dovish signal, suggesting future rate increases may be less aggressive than previously feared. This tempered expectations for rapid tightening and fueled positive sentiment in Asian equity markets.
Market Impact: The Nikkei 225 surged +1.99% and the KOSPI gained +2.38%.