The Bank of Japan (BOJ) has announced an increase in its key interest rate from -0.1% to a range of 0% to 0.1%. This decision comes as wages have risen following a surge in consumer prices. In its statement, the BOJ expressed its intention to maintain its government bond purchases at current levels and escalate purchases if bond yields experience rapid increases.
The anticipation of a rate hike has been growing since Governor Kazuo Ueda assumed office last year. Despite a slowdown in the rate of price increases, Japan’s core consumer inflation remains at the BOJ’s 2% target as of January. The decision to raise rates was influenced by major corporations increasing wages for their employees to mitigate the impact of rising living costs.
This hike marks the end of negative interest rates in all countries. Additionally, the BOJ has abandoned its yield curve control policy, which involved purchasing Japanese government bonds to regulate interest rates.