The Bank of Japan (BOJ) has ended its negative interest rate policy, raising borrowing rates for the first time in 17 years. This decision marks a significant shift from the central bank's previous stance of massive monetary easing.
The BOJ's move comes amid rising inflation and wages in Japan. Economists predict that recent pay raises promised by large Japanese companies will further boost the economy. However, BOJ Governor Kazuo Ueda has not provided a clear timeline for future policy adjustments.
The market now anticipates the possibility of further rate hikes by the BOJ before the end of the year. An October hike is considered likely, while a July rate increase is also being discussed.
Japan's inflation rate rose for the first time in four months in February, reaching 2.8% year-over-year. This marks 23 consecutive months that core inflation has exceeded the BOJ's 2% target.
Following the BOJ's policy shift, the Nikkei Stock Average closed at an all-time high. Dovish remarks from the U.S. Federal Reserve and comments from Governor Ueda indicating continued accommodative monetary policy contributed to the bullish sentiment in Japanese stocks.