There’s a significant shift in Japan’s monetary strategy as the Bank of Japan (BOJ) has terminated its 17-year-long policy of negative interest rates.
After a two-day policy meeting, this decision was unveiled and highlights the BOJ’s confidence in Japan’s developing wage-price dynamics and its pursuit of economic growth.
The move comes after rising wages and aims to encourage a healthier economic landscape.
‘The BOJ has shifted gears from its long-standing negative interest rate policy, setting a new target range of zero % to 0.1 % for the overnight call rate’, as per the media reports.
The respective move highlights the central bank’s resolve to normalise its monetary policy framework.
The termination of these measures signals a return to a more conventional monetary policy approach, with short-term interest rates emerging as the primary policy instrument.
The decision to end negative rates and start a rate hike stems from the BOJ’s assessment of Japan’s evolving economic landscape.
‘The central bank observed a robust wage-price cycle, fuelled by huge pay increases, which has strengthened its confidence in achieving the targeted 2 % price stability sustainably’, according to the Japan Times.
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