On expected lines, the Bank of Japan, on Friday, December 19, raised its key policy rate by 25 basis points (bps) to 0.75%. The decision is remarkable as the current benchmark rate in Japan is now at its highest level since September 1995- a 30-year high.
Japan has kept interest rates near or below zero for years to counter deflation. Even after the COVID pandemic, when global central banks started raising rates, Japan kept its rates intact.
However, mounting inflationary pressures forced the BOJ to shift its stance. After 17 years, the BoJ ended its era of negative interest rates on March 19, 2024, when it raised rates to a range of 0 to 0.1% from minus 0.1% earlier.
What does the BoJ rate hike mean for the Indian stock market?
After the BoJ interest rate decision, the Sensex jumped over 500 points, and the Nifty 50 reclaimed 25,970 on the upside, indicating that the policy decision was largely discounted in the market.
Japan’s 10-year bond yield was almost 2% up at 1.9% around 9:55 am.
(This is a developing story. Please check back for fresh updates.)
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