The Bank of Japan (BOJ) has delivered a seismic announcement, slamming the brakes on its negative interest rate policy—a bold departure from its long-standing stimulus measures. This historic move marks Japan’s first interest rate hike since the distant echoes of 2007.
BOJ Governor Kazuo Ueda is poised to take the podium later today, shedding light on this monumental decision. The negative interest rate policy, which levied a 0.1% charge on a privileged few financial institutions’ excess reserves parked at the central bank, has loomed large since its inception in 2016.
With inflation reigning above the BOJ’s 2% target for an unprecedented stretch, the writing has been on the wall. Market pundits had long anticipated the central bank’s inevitable pivot from its loose monetary stance, and the time has come for action, expectedly in March or April.