BOJ Rate Hike Falls Short of Supporting Yen Amid Hawkish Central Bank Sentiment

The Japanese yen weakened on Friday after the Bank of Japan (BOJ) raised interest rates to a 31-year high of 1.25%, but fell short of supporting the currency.

The decision, which was expected, sparked excitement among yen bears with two board members dissenting to the hike.

Chris Scicluna, head of research at Daiwa Capital Markets Europe, noted that with the Federal Reserve raising rates for the first time in three years on Wednesday, there is a risk the yen could weaken sharply again, further exacerbating inflation.

The BOJ's decision wraps up the series of major central bank meetings this month, which have seen policymakers ratchet up hawkish rhetoric.