Yen Falls Sharply as BoJ Raises Rates Amid Inflation Fears

Global stocks and bonds declined yesterday as markets approached the end of a turbulent week marked by central banks' efforts to combat inflation.

The Bank of Japan raised interest rates for the first time in nine months, increasing them to a 31-year high of 1.25%. However, this decision was expected, and the yen fell sharply against the dollar, which rose 1.2% to 157.82.

BoJ Governor Kazuo Ueda stated that with underlying inflation approaching 2%, the bank's policy focus has shifted, but most board members believe the policy is still accommodative.

Chris Scicluna, head of research at Daiwa Capital Markets Europe, warned that the yen could weaken further, exacerbating inflation. He predicted another rate hike to 1.50% by the end of the year.