Yen Slides as BOJ Hikes Rates Amid Hawkish Fed Outlook

The Japanese yen weakened on Friday despite the Bank of Japan raising interest rates to a 31-year high. The move was widely expected, but two policymakers dissented in favor of keeping rates unchanged, tempering expectations for further tightening.

The BOJ raised its policy rate by 25 basis points to 1.25% in a 7-2 vote, with Governor Kazuo Ueda's press conference awaited for clues on the timing and pace of further rate increases.

Data showed Japan's August core consumer prices rose 1.7% from a year earlier, below the 1.8% increase expected by economists and unchanged from July.

The dollar remained underpinned by expectations that the Federal Reserve could raise rates again next month, with Fed funds futures pricing a 53% probability of a quarter-point increase at the next meeting.