The Bank of Japan raised interest rates on Friday to their highest since the 2008 global financial crisis and revised up its inflation forecasts, underscoring its confidence that rising wages will keep inflation stable around its 2% target.

The Bank of Japan raised its key interest rate to about 0.5% from 0.25% Friday, noting that inflation is holding at a desirable target level. “The economy is gradually recovering,” BOJ Gov. Kazuo Ueda told reporters after a two-day policy board meeting in Tokyo.

The Japanese yen is slightly lower on Thursday. In the European session, USD/JPY is trading at 156.25, down 0.16% on the day.

The Bank of Japan hiked interest rates to 0.5%, the highest level since October 2008, and pledged to raise rates further if the economy and inflation continue in line with projections. The bank’s pledge to seek more rate hikes sent Japanese government bond yields higher and boosted the yen.

Traders look to Trump’s speech for a fresh impetus ahead of the BoJ decision on Friday.

USD/JPY faces pivotal week as BoJ rate hike, inflation data, and Trump’s policies loom. Key levels at 150 and 160 in focus amid market volatility.

In a widely anticipated move, the Bank of Japan on Jan. 24 raised its short-term policy rate to 0.50% from 0.25%. Read more here.

The move comes in line with expectations from CNBC’s survey, where an overwhelming majority of economists predicted a hike.

The Bank of Japan has raised short-term interest rates by a quarter point, the highest in 17 years, signalling efforts to normalise monetary policy in response to persistent inflation and increasing wages.

Markets have also focused on a speech by Ueda’s deputy last week that was widely interpreted as suggesting conditions would now justify an increase. The yield on the benchmark 10-year Japanese government bond rose to 1.25 per cent — the highest since April 2011 — in the wake of his comments.

For some economists, the latest move was too completely priced in, begging the question of how explicitly the BOJ intends to signal its plans in the future.