BoJ Hike Fails to Boost Japanese Yen Amid Rate Hike Uncertainty

The Bank of Japan (BoJ) has hiked interest rates to a 31-year high in an effort to combat inflation, but the move failed to strengthen the Japanese yen. The BoJ raised its target rate by 0.25 percentage points to around 1.25%, with Governor Kazuo Ueda signaling that further increases may follow.

However, the decision was met with a 7-2 split vote among policy board members, casting doubt on the central bank's commitment to further tightening. The yen subsequently dropped by 1.3% against the US dollar.

The BoJ has been gradually shifting away from its ultra-loose monetary policy, which began when it ended negative interest rates in March 2024. Despite this move, the yen remains weak, having fallen to near 158 against the US dollar on Friday.