The return of inflation and wage growth is giving the Bank of Japan room to raise interest rates and declare the end of a long period of stagnation.

Despite limited developments that would justify a policy shift since December, Japan's central bank nevertheless went ahead to raise interest rates.

Australia's export price index rose 3.6%, while its import price index advanced 0.2% in the fourth quarter of 2024.

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Giving explicit advance signals, in addition to making the Bank of Japan feel boxed in, could breach Japanese law stipulating the nine-member board must debate and sign off on rate decisions at each policy meeting.

Outside of a U.S. President bending norms, the Fed also faces challenges in achieving its economic objectives. Inflation remains above its 2% target: Its preferred measure is at 2.4%, though core prices — considered a better gauge of where inflation is headed — rose 2.8% in November from a year ago.

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.

Recent data show Japanese workers are gaining better wages and are generally set to receive solid pay raises in their upcoming annual union negotiations

The Bank of Japan raised its key interest rate to about 0.5 per cent from 0.25 per cent Friday, noting that inflation is holding at a desirable target level. The decision by the central bank came at the end of a two-day policy board meeting in Tokyo.

A raft of U.S. economic data will provide plenty for investors to watch out for in the coming week, including ISM data on manufacturing and services as well as closely-watched nonfarm payrolls figures for January.

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 eurozone cuts,

Stock Market Updates: Benchmark equity indices opened on a positive note on Friday. The BSE Sensex started at 76,889, gaining 129.08 points or 0.17% from its previous close of 76,759.81. Similarly, the NSE Nifty50 opened 47.25 points or 0.20% higher at 23,296.75, compared to its prior close of 23,249.50.