Bank of Japan ends the world's only negative rates regime in a historic move
Japan’s central bank raised interest rates on Tuesday for the first time since 2007, ending the world’s last negative rates regime.
Japan’s central bank raised interest rates on Tuesday for the first time since 2007, ending the world’s last negative rates regime on early signs of robust wage gains this year.
The BOJ raised its short-term interest rates to around 0% to 0.1% from -0.1%, according to its statement at the end of its two-day March policy meeting. Japan’s negative rates regime had been in place since 2016.
The BOJ also announced the abolition of its radical yield curve control policy for 10-year Japanese government bonds, which the central bank has employed to target longer-term interest rates by buying and selling bonds as necessary.
The BOJ said it would stop purchases of exchange-traded funds and Japan real estate investment trusts (J-REITS) and will slowly reduce its purchases of corporate bonds, aiming to stop this practice in about a year.
The BOJ will, however, continue its purchases of Japanese government bonds with broadly the same amount as before. This represents the sharpest pullback in its decades-old radical policy tinkering in the form of asset purchases and quantitative easing to reflate the world’s fourth-largest economy.
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