Bank of Japan Expected to End Decade-Long Negative Interest Rate Policy

The Bank of Japan is expected to end its negative interest rate policy, the last one remaining globally, in the coming weeks. This would mark the end of a decade-long experiment with negative rates by central banks.

The BOJ went negative in 2016 to stimulate inflation and growth. But inflation only reached the 2% target due to external shocks like Covid-19 and the Ukraine war.

Negative rates squeezed bank margins and caused stress for pension funds, leading to public backlash in Japan. The policy never went below -0.1%.

Other central banks like the ECB and SNB also went negative, but have since reversed course as inflation emerged. The verdict on the policy's effectiveness is mixed.

Ending negative rates in Japan could boost bank stocks but may pressure the government's budget. Rates are still expected to remain near zero for some time.