Asian markets experienced a mixed performance today as the Bank of Japan raised its benchmark interest rate for the first time in 17 years, leaving its longstanding negative interest rate policy that had diverged from the strategies of most central banks. 

The Bank of Japan lifted its overnight call rate to a range of 0 to 0.1%, marking a shift from the previous negative 0.1% rate. The Bank of Japan cited indications of stabilized inflation above its 2% target, driven by wage hikes and other factors but noted “extremely high uncertainties”, stemming from weaknesses in industrial production, exports, housing investment, and government spending.

However, there is still a concern that a hike in rates could disrupt financial markets as investors switch their assets to Japan in search of better ROI.

Japan’s Nikkei 225 index slightly went up by 0.7%, reaching 40,003.60 while the dollar gained ground against the Japanese Yen, reaching 150.35 from 149.14 Yen. 

Chinese stock market witnessed declines, with Hong Kong’s Hang Seng index dropping 1.2% to 16,526.98, while the Shanghai Composite index dropped by 0.7% to 3,064.56. 

South Korea’s Kospi index also fell by 1.1% to 2,656.17, while Australia’s S&P/ASX 200 slightly went up by 0.4% to 7,703.20 following the Reserve Bank of Australia’s decision to maintain its benchmark interest rate at 4.35% for the third consecutive meeting, reflecting cooling inflation still above the bank’s target.