Japan raises interest rates for first time in 17 years

BBC

JAPAN: Japan’s central bank has raised the cost of borrowing for the first time in 17 years.

The Bank of the Japan (BOJ) increased its key interest rate from -0.1% to a range of

0%-0.1%. It comes as wages have jumped after consumer prices rose.

In 2016, the bank cut the rate below zero in an attempt to stimulate the country’s stagnating economy.

The hike means that there are no longer any countries left with negative interest rates.

When negative rates are in force people have to pay to deposit money in a bank. They have been used by several countries as a way of encouraging people to spend their money rather than putting it in a bank.

The BOJ also abandoned a policy known as yield curve control (YCC), which saw it buying Japanese government bonds to control interest rates.

YCC policy has been in place since 2016 but has been criticised for distorting markets by keeping long-term interest rates from rising.