Bank of Japan Governor Kazuo Ueda proposed ending negative interest rates as chair of the policy-setting board, public broadcaster NHK reported as per news agency Reuters marking a historic shift. The move could be Japan’s first interest rate hike in 17 years but will still keep interest rates stuck around zero amid fragile economic recovery.
This makes Japan the last central bank to exit negative rates ending an era in which policymakers propped up growth through cheap money and unconventional monetary tools.
Izumi Devalier, head of Japan economics at BofA Securities, said, “This would be the first rate hike in 17 years, so it has a lot of symbolic significance. But the actual impact on the economy is very small. We would not expect a substantial rise in funding costs or households mortgage rates.”
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