The Bank of Japan has decided to raise its policy interest rate from the current level of about 0.25 percent to around 0.5 percent, the highest since October 2008.

The decision by a majority vote came at the central bank's monetary policy meeting in Tokyo on January 23 and 24.

The BOJ previously raised its short-term interest rate in July last year.

The latest hike came as the bank determined that the rate of wage increases this year will likely be around as high as last year.

It also observed that US President Donald Trump's new administration did not impose tariff hikes to other countries on the day of his inauguration, providing reassurance to financial markets.

The Nikkei Stock Average has shown an upward trend, and no major turmoil has been seen in markets.

Based on these factors, the BOJ went ahead with implementing an additional rate hike as it saw that conditions for the move had been met.