By Kosaku Narioka

Mitsubishi UFJ Financial Group shares rose to their highest intraday level since listing in April 2001, buoyed by growing confidence that modest inflation is taking hold in Japan and that the central bank will keep gradually raising rates.

Shares were briefly 3.0% higher at 1,963.5 yen earlier on Monday in Tokyo, surpassing the previous record intraday high of 1,950 yen set in April 2006. The stock pared gains and was last up 1.9%.

The Japanese central bank on Friday raised interest rates to the highest level since October 2008 as the economy makes steady progress toward its goal of stable 2% inflation.

The Bank of Japan lifted its target for the overnight call rate to 0.5% from 0.25%. That marked the third rate increase after the Japanese central bank in March last year ended the world's sole negative interest-rate policy, which weighed on commercial banks' earnings.

Earlier this month, the 10-year Japanese government bond yield rose to 1.255%, its highest level since April 2011. Higher government bond yields mean banks may charge higher interest rates on commercial loans and earn better yields from bonds and other investments.

In November, Mitsubishi UFJ raised its net-profit guidance to 1.75 trillion yen, equivalent to $11.22 billion, from 1.500 trillion yen for the fiscal year ending March 2025. The financial company is scheduled to report its quarterly results next week.

In its quarterly outlook released Friday, the BOJ's policy board said it expects consumer inflation excluding volatile fresh food prices to reach 2.7% in the year ending March 2025, compared with the 2.5% it projected in October.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

January 26, 2025 20:36 ET (01:36 GMT)

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