TOKYO (Kyodo) -- The yen briefly rose over 1 yen to the upper 154 level against the U.S. dollar on Friday in Tokyo as the Bank of Japan was seen by the market to further raise interest rates after hiking its policy rate and lifting inflation outlook.

Speculation has grown that the central bank could be more aggressive in tightening monetary policy if inflation continues to climb, following the widely expected rate hike from 0.25 percent to 0.5 percent at its policy meeting, dealers said.

"Given the inflation outlook for fiscal 2025 has been raised, there is a growing view that the so-called terminal rate may end up higher than the 1 percent the market had expected," said Takuya Kanda, senior researcher at the Gaitame.com Research Institute.

In its latest projections for the core consumer price index, excluding volatile fresh food, the BOJ estimated the index will grow 2.4 percent in fiscal 2025, compared with the previous forecast of 1.9 percent.

The yen's appreciation was also supported by dollar selling after U.S. President Donald Trump said in a recently aired interview that he would prefer not to impose tariffs on China, Kanda said.

At 5 p.m., the dollar fetched 155.37-39 yen compared with 156.02-12 yen in New York and 156.60-62 yen in Tokyo at 5 p.m. Thursday.

The euro was quoted at $1.0460-0462 and 162.52-56 yen against $1.0410-0420 and 162.44-54 yen in New York, and $1.0400-0401 and 162.87-91 yen in Tokyo late Thursday afternoon.

The yield on the benchmark 10-year Japanese government bond rose 0.025 percentage point from Thursday's close to 1.230 percent, as the debt was sold on expectations of higher interest rates in the near future.

Stocks were firm in the morning following overnight gains on Wall Street but turned lower as the yen climbed following the BOJ announcement, raising concerns of higher borrowing costs and reduced profits for exporters, brokers said.

Equities moved little around the previous day's closing levels toward the end of the day, as a wait-and-see mood took hold ahead of BOJ chief Kazuo Ueda's press conference after market close.

The 225-issue Nikkei Stock Average ended down 26.89 points, or 0.07 percent, from Thursday at 39,931.98. The broader Topix index finished 0.70 point, or 0.03 percent, lower at 2,751.04.

On the top-tier Prime Market, decliners were led by transportation equipment, oil and coal product, and glass and ceramic product shares.