TOKYO, July 31 (V7N/AFP) – The Bank of Japan has increased its key interest rate to 0.25 percent, marking only the second rate hike in 17 years as it moves away from its longstanding ultra-loose monetary policies. This follows the abandonment of its negative interest rate policy earlier this year.
 
The decision, announced after a two-day policy meeting, caused the yen to rise briefly before settling at levels above 153 per dollar. The BoJ cited wage increases and economic activity aligning with its expectations as reasons for the adjustment.
 
Analysts were divided on the implications of the rate hike. Some feared it could hinder economic growth and potentially lead to a recession, while others considered it a necessary step toward normalizing monetary policy. The yen has depreciated significantly against the dollar over the past two and a half years, partly due to Japan's low interest rates, which contrasts with rising rates elsewhere.
 
This rate hike comes ahead of a Federal Reserve policy announcement later today, with expectations that the Fed will likely maintain current rates while offering guidance on potential future changes.
 
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