The Nikkei Index closed up 1.0% at 49,507.21 points. The Bank of Japan (BOJ) raised its benchmark interest rate to the highest level in three decades, signaling growing confidence in achieving its long-sought stable inflation target.
In a Friday policy statement, the BOJ's policy board, led by Governor Kazuo Ueda, unanimously agreed to increase the policy rate by 0.25 percentage points to 0.75%. The central bank noted that the likelihood of its economic outlook materializing has increased. All 50 economists surveyed by Bloomberg had anticipated the rate hike.
The BOJ made clear that the tightening cycle would continue, emphasizing that borrowing costs would rise further if economic projections hold. The bank also pointed to a moderate upward trend in underlying inflation.
Following the BOJ's decision to raise rates to a 30-year high and signal further tightening, Japan’s 10-year government bond yield surged to a 26-year peak on Friday.
The Nikkei Index advanced, with AI-related stocks leading the gains.
The 10-year Japanese government bond yield extended its earlier rise, climbing 5.5 basis points to 2.02%, the highest level since August 1999. The 2% mark has long been viewed as a symbolic ceiling during Japan’s decades-long battle against deflation.
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