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

The Bank of Japan raised its key policy rate to the highest level since 2008 and took a more bullish view on the strength of inflation.The rate hike followed a report showing consumer prices excluding fresh food rising at a faster pace of 3%,

Japan's central bank has increased the cost of borrowing to its highest level in 17 years, after consumer price rises accelerated last year. The move by the Bank of Japan (BOJ) to raise its short-term policy rate to 0.5% comes just hours after the latest economic data showed prices rose last month at the fastest pace in 16 months.

Japan's central bank raised interest rates to their highest since the 2008 global financial crisis and revised up its inflation forecasts.

The Bank of Japan had held off hiking rates late last year, preferring instead to wait out any economic surprises from the White House