Clement Tan is a senior correspondent with CNBC.
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.
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. The BOJ had barely budged from its ultra-loose monetary policy posture despite “core core inflation” — which excludes food and energy prices — exceeding its 2% target for more than a year, because policymakers viewed price increases as largely imported.
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