The Bank of Japan raised its key interest rate to about 0.5% from 0.25% Friday, noting that inflation is holding at a desirable target level. “The economy is gradually recovering,” BOJ Gov. Kazuo Ueda told reporters after a two-day policy board meeting in Tokyo.

Despite limited developments that would justify a policy shift since December, Japan's central bank nevertheless went ahead to raise interest rates.

The Bank of Japan raised interest rates on Friday to their highest since the 2008 global financial crisis and revised up its inflation forecasts, underscoring its confidence that rising wages will keep inflation stable around its 2% target.

Outside of a U.S. President bending norms, the Fed also faces challenges in achieving its economic objectives. Inflation remains above its 2% target: Its preferred measure is at 2.4%, though core prices — considered a better gauge of where inflation is headed — rose 2.8% in November from a year ago.

In a widely anticipated move, the Bank of Japan on Jan. 24 raised its short-term policy rate to 0.50% from 0.25%. Read more here.

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Japan’s stance is at odds with the loosening trends adopted by the U.S. Federal Reserve and the European Central Bank, which have been cutting rates after raising them to clamp down on inflation.

Consumer Stress Is on the Rise Rising auto repossessions and a growing rate of minimum credit card payments offer signs consumers may be getting stretched. Those figures complicate the notion that the consumer is relatively healthy,

Wall Street shares looked set for more gains on Thursday, as investors cheered earnings from Meta, but shunned Microsoft, while the dollar was steady against most other currencies after the Federal Reserve left rates unchanged.

The first central bank meetings of 2025 suggest it will be a year in which policymakers go their own way as economic paths diverge, as the United States holds interest rates steady, the euro zone cuts,

The Fed said the job market is “solid,” and noted that the unemployment rate “has stabilized at a low level in recent months.”

The yen made broad gains on Thursday as Japan looks on track to keep raising interest rates while others cut, with the European Central Bank seen certain to deliver the latest in a series of policy easings later in the day.