BOJ Rate Hike Fails to Strengthen Yen Amid Market Disappointment

The Bank of Japan (BOJ) surprised markets by raising its policy rate to 1.25 per cent on Friday, despite expectations that it would strengthen the yen. The decision was a 7-2 vote, and some analysts are calling this development a 'credibility problem'.

However, the market's reaction was the opposite of what was expected: the yen fell sharply against the dollar after the announcement.

Wealth managers were disappointed by the lack of currency appreciation, which many had anticipated would be a direct result of the rate hike. The 10-year government bond yield remained close to 3 per cent.