BOJ raises rates to 1.25%, but dovish guidance sends yen lower

The Bank of Japan has raised its policy rate to 1.25%, its highest level in 31 years, but the market reaction was dominated by a relatively dovish interpretation of the central bank's guidance.
Despite the rate increase, $JPY weakened against the dollar while Japanese equities moved higher, suggesting traders had positioned for a more restrictive policy signal.
The reaction highlights how forward guidance can outweigh the headline rate decision when a policy move has already been heavily anticipated.