Bank of Japan expected to end negative rates

Tokyo, March: The Bank of Japan is widely expected to scrap its maverick negative interest rate policy on Tuesday and hike borrowing costs for the fir...

Tokyo, March: The Bank of Japan is widely expected to scrap its maverick negative interest rate policy on Tuesday and hike borrowing costs for the first time in 17 years, according to economists and media reports.

The US Federal Reserve and other central banks yanked up rates to rein in galloping inflation after Russia's 2022 invasion of Ukraine.

But haunted by the country's "lost decades" of stagnation and deflation, the BoJ kept its main rate negative, as it has been since 2016. The last hike was in 2007.

Because this means banks lose by parking capital with the BoJ, they are encouraged to lend to businesses and thereby jump-start the economy and inflation.

The BoJ has also spent vast amounts buying up bonds and other assets to pump liquidity into the financial system.