The Bank of Japan raised its short-term policy rate to 0.75 per cent, marking another step away from years of ultra-loose monetary policy

Most Asian currencies were largely unchanged on Friday, while the Bank of Japan delivered a widely expected policy tightening.

The Bank of Japan raised its short-term policy rate to 0.75 per cent, marking another step away from years of ultra-loose monetary policy.

The BOJ judged that price growth and wage dynamics were becoming more durable.

The central bank said the decision reflected steady progress toward achieving its inflation target, supported by improving corporate pricing behaviour and solid wage settlements. Governor Kazuo Ueda is scheduled to hold a news conference later in the day to explain the decision and provide guidance on the pace of future tightening.

The yen’s USD/JPY held largely steady, up 0.2 per cent at 155.92 yen, as traders weighed uncertainty over how quickly the BOJ will proceed with further hikes. Markets had largely priced in the move, limiting its impact on broader regional currencies.

In other news, data on Friday showed that Japanese consumer price index inflation remained steady as expected in November, with underlying inflation cooling slightly but remaining well above the Bank of Japan’s annual target.

Across Asia, foreign exchange markets remained flat as investors also turned their focus to other factors such as the U.S. interest rate outlook.

Among currencies, the won’s USD/KRW gained 0.3 per cent, while the Singapore dollar’s USD/SGD edged up 0.2 per cent.

The US Dollar Index, which measures the dollar against a basket of major currencies, added 0.1 per cent. US Dollar Index Futures also traded 0.1 per cent higher as of 04:04 GMT.