BOJ Hike Falls Flat as Yen Struggles with Rate Gap

The Bank of Japan (BOJ) raised its policy rate by 25 basis points to 1.25%, the highest level in 31 years, but failed to convince traders it's serious about further rate hikes.

The decision, which passed 7-2, was widely expected and left little room for the yen to gain from the announcement itself.

Traders had already priced an 83% probability of the move, so the surprise factor arrived in the guidance from BOJ Governor Kazuo Ueda.

The top official didn't provide enough details around a possible October hike, leaving traders to believe that today's move was more of a one-and-done act rather than a series of hikes designed to strengthen the yen and stamp out stubborn inflation.