The Bank of Japan has raised its benchmark interest rate for the first time in 17 years, ending a long period of negative rates aimed at stimulating the economy, Associated Press reports.
This hike, the first since 2007, raises the benchmark interest rate to a range of 0 to 0.1% from minus 0.1%. The move reflects the bank’s confidence in the economy’s recovery, stating that the negative rates policy had fulfilled its role. The decision was supported by wage increases, robust corporate profits, and reaching a stable inflation of around 2%.
However, the bank remains cautious about normalizing monetary policy, emphasizing that it will keep monetary policy easy for some time. The bank said it will continue to inject money into the economy by purchasing government bonds, but it will discontinue the purchases of real estate investment trusts and other assets.
