While the move was Japan's first interest rate hike in 17 years, it still keeps rates stuck around zero as a fragile economic recovery forces the central bank to go slow in any further rise in borrowing costs, analysts say.
"The elimination of negative interest rates in particular signals the BOJ's confidence that Japan has emerged from the grip of deflation," he added. The central bank also abandoned yield curve control , a policy that had been in place since 2016 that capped long-term interest rates around zero. "We judged that sustainable, stable achievement of our price target came in sight," the central bank said in a statement explaining the decision to dismantle former Governor Haruhiko Kuroda's massive stimulus programme.
The language compared with the more dovish guidance that was removed from the statement, in which the Bank of Japan pledged to ramp up stimulus as needed, and keep increasing the pace of money printing until infla tion stably exceeded 2%.
Source: Loan Digest (loandigest.net)
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