The Japanese central bank has decided to raise the interest rate by 0.25 percentage points to 0.5 percent, the highest level since 2008.
The decision came after data showed that core inflation in the world's fourth-largest economy rose to three percent in December.
While central banks elsewhere have raised their interest rates at a relatively rapid pace in recent years, Japan's central bank has stood out by long holding onto negative interest rates in order to get inflation and growth going. This was abandoned in March last year and in July the bank "shocked" the world by raising to 0.25 percent.
The central bank simultaneously announced that Japan's "lost decades" marked by stagnation and stagnant or falling prices were over.
