TOKYO, July 31 Reuters Shortterm Japanese government bond yields scaled 15year peaks and Japanese bank shares soared on Wednesday as the Bank of Japan raised interest rates for only the second time since 2007 while announcing a halving of its monthly bond buying.

The twoyear JGB yield jumped as much as 8 basis points bps to reach 0.45 for the first time since April 2009. The fiveyear yield added 8 bps to 0.665, the highest since November 2009.

The Tokyo Stock Exchange39;s banking index advanced 4.7, with big gains for lenders helping the Nikkei share average to reverse earlier declines.

Exporter shares also recovered after the yen gave up early gains to stabilize around 153 per dollar , following volatile trading in the aftermath of the policy announcement.

Chipsector shares rallied strongly after a Reuters report that some Japanese companies would be exempt from U.S. curbs on semiconductormanufacturing equipment exports to China.

The BOJ hiked the key rate target to 0.25 from near zero, and also unveiled 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 early 2026.

In March, the BOJ had ended its negative rate policy and set the overnight call rate as its new policy rate, guiding it in a range of 00.1.

Given that today39;s decision is only four months after the first hike, the market should think the BOJ is perhaps a bit more hawkish than it thought, said Naka…