The Nikkei 225 index fell 0.07% to close at 39,932, while the broader Topix index fell 0.03% to 2,751 on Friday, ending a four-day winning streak after the Bank of Japan raised interest rates by 25 basis points to 0.5%, in line with expectations. The rate hike brought short-term borrowing costs to a 16-year high.

The central bank also projected that inflation would hit its 2% target in the second half of its forecast period, signaling the possibility of further rate hikes. On the economic front, Japan's core inflation rate jumped to a 16-month high of 3% in December, strengthening the rationale behind the BOJ's decision. Notable decliners included Disco Corp (-6.7%), SoftBank Group (-1.8%), Tokyo Electron (-1.1%), Toyota Motor (-1.5%), and Nidec (-3.2%). Despite Friday's declines, the Nikkei and Topix indexes posted gains of 3.85% and 2.67% for the week, respectively. (AL)

Source:Trading Economics