Bank of Japan Deputy Governor Ryozo Himino said on Thursday that the central bank will continue to raise interest rates if the economy and prices move in line with the bank's forecasts.

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 (BOJ), after clearly signalling last week ... That shift to clearer guidance, an approach that the US Federal Reserve used in August to signal a policy shift, may prove temporary. Japanese policymakers fear being led by the markets ...

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.

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.

LONDON, Jan 30 (Reuters) - 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, and outlier Japan is firmly in hiking mode.

The FTSE 100 ( ^FTSE) and European stocks were higher on Thursday, with all major indices gaining ground in early trading, as the European Central Bank (ECB) is expected to cut interest rates in an effort to support economic growth later this afternoon.

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