**********Bank of JapanOn Friday, interest rates were raised by 25 basis pointsraise interest ratesThe magnitude is the largest since February 2007, further indicating that the Japanese economy has finally returned to normal. This move is widely expected in the market, reflecting the Bank of Japan's increasingly optimistic expectation that wages will continue to rise, thereby keeping the inflation rate around the 2% target.

The committee voted 8:1 to raise the short-term policy rate from 0.25% to 0.5%. Councilor Tomohiro Nakamura disagrees with this decision.

The Policy Committee of the Bank of Japan estimates a median real GDP growth of 1.0% for the 2026 fiscal year, 1.1% for the 2025 fiscal year, and 0.6% for the 2024 fiscal year.

The median estimate for the core CPI for the 2024 fiscal year is a 2.7% increase, estimated to be a 2.5% increase in October. The median estimate for the core CPI for the 2025 fiscal year is a 2.4% increase, estimated to be a 1.9% increase in October. The median estimate for the core CPI for the 2026 fiscal year is a 2.0% increase, estimated to be a 1.9% increase in October.

The Bank of Japan stated that it will implement monetary policy appropriately from the perspective of sustainable and stable achievement of the 2% inflation target. If the economic and price trends meet expectations, it will continue to raise policy interest rates, with real interest rates at a very low level.

The Bank of Japan's policy statement contains an interesting statement expressing its confidence in the market: 'Global financial and capital markets remain generally stable'. Reminiscent of the comments made by Kazuo Ueda and other officials in August last year, when they stated that they would not raise interest rates in times of market instability. Interestingly, the decision to raise interest rates this time was passed 8-1, while at the last meeting, the Bank of Japan decided 8-1 to maintain interest rates unchanged.

The overall content of the Bank of Japan's resolution sounds hawkish, providing support for the yen as it states that if its prospects become a reality, it will continue to raise interest rates. In addition, it has raised its inflation forecast for this fiscal year and the next two years, making its forecast further higher than that of private sector economists.

Analyst Reidy commented on the decision of the Bank of Japan to raise interest rates as scheduled, and reiterated that it will "continue to raise policy rates and adjust the degree of monetary easing," which is consistent with the wording it used in July 2024, when the Bank of Japan also carried out interest rate hikes.

MATT SIMPSON, Senior Market Analyst at Brisbane CITY INDEX: The Bank of Japan's interest rate hike is expected, but for the first time in a long time, their economic outlook seems to have not been significantly lowered. This makes it possible to raise interest rates by another 25 basis points before the end of the year, which will reach a level of 0.75%.

Naoya HASEGAWA, Chief Bond Strategist at Okazaki Securities in Tokyo, said that the decision of the Bank of Japan is in line with our expectations. We are waiting for the speech of the Governor of the Bank of Japan (Kazuo Ueda) at the press conference after the meeting. We want to know his outlook on the future interest rate path, not why the Bank of Japan raised interest rates at this meeting. The market now expects the Bank of Japan to raise interest rates every six months, so we would like to know Ueda's opinion on this.

Bank of Japan Governor Kazuo Ueda is scheduled to hold a press conference at 2:30 pm to explain policy decisions.