The Bank of Japan elevated its key interest rate to 0.5% from 0.25%, marking the highest level in 17 years. This decision, based on rising inflation currently at 3%, and improved wage growth, reflects the central bank's confidence in a recovering economy. BOJ Governor Ueda indicated that further gradual hikes are anticipated. Market reactions included a strengthening yen, while stock indices showed little change due to the anticipated move. This marks a significant shift from Japan's historically low rates aimed at combatting decades of deflation.