The Bank of Japan raised its short-term policy rate from 0.75% to 1%, a level last seen in 1995, as it moves to normalize monetary policy amid mounting inflation pressures. The decision was approved in a 7-1 vote, with board member Toichiro Asada dissenting due to concerns that the Middle East conflict poses a bigger threat to economic growth than inflation. The central bank also said it will continue cutting government bond purchases by 200 billion yen each quarter, eventually reducing monthly purchases to 2 trillion yen from April 2027. The yen carry trade is gaining momentum again, with leveraged funds boosting their bets against the yen to more than 115,000 contracts in the week ended June 9, the largest bearish position since November 2017, according to CFTC data. At the time of writing, the yen was trading at 160.29 per dollar, while yields on 10-year Japanese government bonds rose 3 basis points to 2.647%.