Japan Bank ends negative interest rate policy

For the first time in 17 years, they are expected to increase to . The move was also announced after major wage increases in large companies. The Bank of Japan has increased interest rates for the first time since 2007. The Bank of Japan Monetary Policy Committee (BoJ) increased the basic interest rate, which had reduced to -0.1% in 2016, to 0-0.1%. At the same time, monetary policy makers decided to end the review of the yield curve, which had recently reduced interest rates on ten-year government bonds to one percent. The market for traded equity funds (ETF) will also stop. After 25 years of fighting deflation, BoJ launches a new era of monetary policy. The measures taken so far “have fulfilled their role,” BoJ said after the decision, in order to achieve a good cycle of wage and price growth. In their view, two criteria for raising interest rates are now met. On the one hand, the central bank stated that the 2% inflation target could be achieved “sustainablely and gradually” this year. On the other hand, central bank commander Kazuo Ueda (Kazuo Ueda), wanted to wait and see if wages would increase faster than prices, so that Japanese could earn more money in real terms. The result of Shunto, the spring battle, had even exceeded expectations last week to such an extent that economist Jesper Kohl (Jesper Koll) warns of a new danger. “Not only is deflation over, but the possibility of raising wages and prices turning into a potentially dangerous inflationary spiral is now significant”.