Bank of Japan Ends the Era of Negative Interest Rates
The Bank of Japan has not raised interest rates for 17 years. For 8 years, it was in the negative zone.
But today there was a dramatic shift in monetary policy — the Bank of Japan announced a decision to increase the interest rate from -0.1% to 0.1%.
The central bank also abandoned yield curve control (YCC), a policy that had been in place since 2016 and capped long-term interest rates near zero.
Considering the scale of the decisions taken, the reaction of the yen exchange rate relative to other currencies turned out to be moderate. This is because the plans of the Bank of Japan have been discussed for a long time, including in official sources of information. Therefore, it is acceptable to assume that participants in the currency markets have already laid down the probability of today's event.
In fact, the yen has weakened as a result, but this may only be an initial reaction in which markets are reassessing the impact of the Bank of Japan's decision over a range of short-term to long-term horizons.
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