The Bank of Japan has hiked rates this morning, another step to normalise an ultra-loose monetary policy that has been in place for most of two decades.
Nudging rates up from 0.1% to 0.25%, this was only the second interest rate increase in 17 years.
Officials also announced plans to curb their purchases of Japanese government bonds, aiming to roughly halve purchases by the start of 2026.
"If the outlook for economic activity and prices presented in the July outlook report will be realized, the Bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation," the bank said in a statement.
The BoJ cited broadening wage hikes and rising inflation expectations as key reasons for the rate increase, while also stressing the need to remain vigilant against the risk of inflation overshooting.
Analysts at Deutsche Bank said this was "a clear signal that future hikes were ahead" and noted that following the decision yields on 2yr Japanese government bonds reached their highest level since 2009.
Economists at HSBC said: "Despite sluggish consumer spending, monetary officials sent a decisive signal by raising interest rates and allowing for a more gradual balance sheet reduction."
** Update: Added analyst comment **