The Bank of Japan has raised the key rate for the first time since 2007

During the two-day meeting, the Bank of Japan decided to increase the key interest rate for the first time since 2007 and abandon the policy of controlling the yield of ten-year government bonds.

Now the short-term deposit rate of commercial banks in the central bank varies from 0% to 0.1% per year, while previously it was set at a negative level of minus 0.1%.

It is worth noting that the Japanese central bank was the last among the world's central banks to keep the rate at a negative level, set back in February 2016. 

The regulator also decided to end the policy aimed at maintaining the yield of 10-year government bonds near zero, allowing fluctuations of up to 1% per year.

The Bank of Japan provides for the abandonment of purchases of exchange-traded index funds and Japanese real estate funds, as well as a gradual reduction in purchases of corporate bonds to zero during the year. At the same time, the purchase of government bonds will continue.

These measures were taken against the background of the fight against low inflation through ultra-loose monetary policy for many years. However, the consumer price index excluding energy and food products has consistently exceeded the Central Bank's target level of 2% for more than a year, indicating sustained inflationary pressure.