The Bank of Japan (BOJ) raised interest rates on Wednesday and unveiled a detailed quantitative tightening plan, taking another landmark step towards phasing out a decade of massive stimulus.

The decision, which defied dominant market expectations for the BOJ to stand pat on rates, takes its short-term policy rate to levels unseen since 2008.

At the two-day meeting ending on Wednesday, the BOJ’s board decided to raise the overnight call rate target to 0.25 percent from 0-0.1 percent in a 7-2 vote.

It also decided on a quantitative tightening (QT) plan that would roughly halve monthly bond buying to 3 trillion yen ($19.6 billion), from the current 6 trillion yen, as of January-March 2026.

“Despite sluggish consumer spending, 추천 monetary officials sent a decisive signal by raising interest rates and allowing for a more gradual balance sheet reduction,” said Fred Neumann, chief Asia economist at HSBC.

“Rising inflation expectations also open the path for ongoing monetary policy normalization by the BOJ. Barring major disruptions, the BOJ is on course to tighten further, with another interest hike by the start of next year,” he said.

The yen rallied as much as 0.8 percent to an over three-month high of 151.58 per dollar immediately after the outcome, though reversed those gains. Yields on the 10-year Japanese government bonds fell slightly on the news.