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Bank of Japan raises rates-USD/JPY reclaims 150

Earlier this morning the Bank of Japan (BOJ) did as was expected by the markets and raised their OCR. The new rate will range between zero and +0.1%, from the prior fixed -0.1% rate. This is the first rate increase in getting on for 2 decades from the BOJ. They also ended their program of EFT buying. At the same time the BOJ have given no indication this is the start of a more aggressive series of rate increases. They will also abandon the current yield curve control (YCC) policy. The BOJ voted 7-2 in favour of the policy shift. The reaction across the markets has seen the Nikkei 225 rise on the news and the Yen has weakened. The USD/JPY has spiked higher on this news, partly because it was the least aggressive move the BOJ could have made and partly because it does not signal any drastic shift in JGB yields. The rise in the Nikkei 225 following this has also supported a weaker Yen. The USD/JPY has risen to a high so 150.44. It is just off that high now though, currently trading at 150.28

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