The Bank of Japan hiked interest rates to 0.5%, the highest level since October 2008, and pledged to raise rates further if the economy and inflation continue in line with projections. The bank’s pledge to seek more rate hikes sent Japanese government bond yields higher and boosted the yen.

The yen was front and centre for currency markets on Friday ahead of a Bank of Japan (BOJ) policy decision where it is all but certain to raise interest rates, while the dollar was headed for its worst week in two months.

The Japanese yen is slightly lower on Thursday. In the European session, USD/JPY is trading at 156.25, down 0.16% on the day.

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Japanese retail investors’ hunger for overseas equities is weighing further on the yen, adding to downside risks posed by tariffs from Donald Trump and the wide interest-rate gap with the US.

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Japanese investors raised their holdings in foreign stocks, driven by a benign U.S. core inflation report that fuelled expectations of Federal Reserve cuts and boosted global equities, while a strong yen also lifted domestic buying power.

Japan's much-loved "tonkatsu" pork cutlets come with a mound of freshly shredded cabbage, but a surge in the price of the humble vegetable has prompted chef Katsumi Shinagawa to skimp on servings. Chef Shinagawa does not want to pass on the price increases to his customers,

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Japan’s much-loved “tonkatsu” pork cutlets come with a mound of freshly shredded cabbage, but a surge in the price of the humble vegetable has prompted chef Katsumi Shinagawa to skimp on servings. The culprit is a changing climate.

The yen strengthened and Japanese government bond yields rose to fresh multi-year highs on Friday after the Bank of Japan hiked interest rates as expected and raised its inflation forecasts. Japan's Nikkei share average pared earlier gains to up 0.