BOJ Hikes Rates, Yen Falls in Split Vote Decision

The Bank of Japan (BOJ) raised interest rates by a quarter-point to 1.25%, effective September 24, but the move was not as hawkish as markets had hoped for.

The decision led to a slide in the yen, with the dollar rising 1.2% to a two-week high of 157.84 yen in European trading.

Despite the rate hike, the BOJ's vote was split at 7-2, with board members Toichiro Asada and Ayano Sato opposing the action, citing concerns about Japan's economy and inflation.

The current policy gap between the US Federal Reserve and the BOJ remains large, with the U.S.-Japan policy gap standing at roughly 2.5 to 2.75 percentage points after the BOJ move.