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 decision by the central bank came at the end of a two-day policy board meeting in Tokyo.

After a long period of stagnation, the return of inflation and wage growth is giving the Bank of Japan room to raise interest rates.

The Bank of Japan has raised its key interest rate to about 0.5% from 0.25%, noting that inflation is holding at a desirable target level. The decision by the central bank came Friday at the end of a two-day policy board meeting in Tokyo.