Tokyo March 19 2024: The Bank of Japan has raised interest rates for the first time since 2007, becoming the world’s last central bank to end negative rates as the country puts decades of deflation behind it.
Following a 7-2 majority vote, the BoJ said it would guide the overnight interest rate to remain in a range of around 0 to 0.1 per cent.
The central bank also removed its yield curve controls, a policy it began in 2016 to reinforce its ultra-loose monetary measures by capping the yields of 10-year Japanese government bonds.
The widely expected move on Tuesday came after workers at some of Japan’s largest companies secured their biggest pay rise since 1991, giving BoJ governor Kazuo Ueda enough confidence that mild inflation will continue.
The BoJ was one of a number of central banks to turn to negative interest rates as a radical policy measure. It introduced negative rates in 2016 as it tried to encourage banks to lend more to generate spending and contain the risks of a global economic slowdown.
The end to one of the most contentious economic experiments of recent times comes as signs emerge of broader change in the Japanese economy.
In February the Nikkei 225 stock index finally surpassed the level reached 34 years ago, while more companies are passing on the costs of inflation to consumers and labour shortages are contributing to higher wages.
