Japan lifts rates to a 31-year high: BOJ raises policy rate 25 bps to 1.25%

The Bank of Japan's 25 bp hike to 1.25% marks the highest policy rate since 1995, a notable shift in Japan's long-running accommodative stance. However, the yen's post-decision weakening suggests markets viewed the move as already priced or accompanied by dovish guidance. The policy surprise and FX reaction can raise near-term volatility in USDJPY and Japan-linked risk assets, with spillovers into global carry trades.