After 17 Years, Bank Of Japan At Last Raises Rates – Reactions

Editorial Staff

20 March 2024

The Bank of Japan has ended the world’s last negative interest rate – it is the first time that the country has raised rates in 17 years. Japan’s decades of stagnation appear to be over. Its stock market has won fans and sparked commentary about a wider renaissance in its economy. One possible factor is that as the West’s relations with a manufacturing powerhouse such as China have cooled, Japan’s status has risen.

Yesterday, the BoJ’s board voted seven to two to set a new policy rate range of between 0 per cent and 0.1 per cent, shifting from its -0.1 per cent short-term interest rate. The BoJ also scrapped its complex yield curve control programme.

As central banks such as the Federal Reserve, the Bank of England and the European Central Bank hiked rates to curb inflation, Japan was something of an outlier. Now that the BoJ has acted, no major central bank has adopted a negative rate policy.

Here are reactions from the banking and asset management sectors.

David Kohl, chief economist, . But we expect the currency will rebound when the Federal Reserve cuts interest rates later this summer.

Aninda Mitra, Head of Asia Macro and Investment Strategy, BNY Mellon Investment Management
We do not see this as the start of a prolonged hiking cycle.

The end of explicit and large-scale policy accommodation is also a new regime for equities, but we still believe that the combination of strengthening nominal GDP and corporate reforms (including debt-buybacks and dividend payouts) warrants an overweight allocation in global portfolios.