Yen soars as central bank suggests more interest rate hikes.
The Bank of Japan has raised short-term interest rates by a quarter point, the highest in 17 years, signalling efforts to normalise monetary policy in response to persistent inflation and increasing wages.
The central bank raised the policy rate to “around 0.5 per cent” by a vote of 8-1, concluding a two-day policy meeting on Friday.
The latest hike came as official economic data showed prices of goods and services, excluding certain volatile items like food and energy, increased by 3 per cent in December over the previous year.
The central bank had last raised the rates in July 2024, surprising analysts, sparking a period of intense volatility for the yen and prompting a one-day "flash crash" in Japanese equities which quickly rebounded.
