The Bank of Japan ends its negative interest rate policy, opting for its first hike in 17 years

BY YURI KAGEYAMA

TOKYO (AP) — Japan’s central bank raised its benchmark interest rate Tuesday for the first time in 17 years, ending a longstanding policy of negative rates meant to boost the economy.

The short-term rate was raised to a range of 0 to 0.1% from minus 0.1% at a policy meeting that confirmed expectations of a shift away from ultra-lax monetary policy.

It’s the first rate hike since February 2007. The negative interest rate policy, combined with other measures to inject money into the economy and keep borrowing costs low, “have fulfilled their roles,” the bank said in a statement.

The bank has an inflation target of 2% that it used as a benchmark for whether Japan had finally escaped deflationary tendencies. But it had remained cautious about “normalizing” monetary policy, or ending negative borrowing rates, even after data showed inflation at about that rate in recent months.