Bank of Japan Governor Kazuo Ueda has suggested ending negative interest rates, potentially leading to Japan’s first interest rate hike in 17 years, while maintaining rates close to zero due to a fragile economic recovery.
This move would conclude a period where policymakers supported growth using unconventional monetary tools.
While the symbolic significance of this hike is significant, the actual impact on the economy is expected to be minimal in terms of funding costs and mortgage rates.
Additionally, the Bank of Japan will decrease the amount of bonds it purchases, particularly reducing the top range for 5-10 year JGBs and 3-5 year bonds, but will continue bond buying operations to sustain its ultra-low rate policy.
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