FOR THE FIRST TIME IN 17 YEARS, THE BANK OF JAPAN RAISES INTEREST RATE; THE NEGATIVE INTEREST RATE POLICY ENDS

Japan escaped deflationary tendencies.

The central bank had set an inflation target of 2 percent, indicating that Japan has finally escaped deflationary trends, the report said. Unlike inflation, in deflation, prices begin to fall. Bank of Japan chief Kazuo Ueda had earlier said the bank would review its negative interest rate if the 2 percent inflation target is met. The central bank also changed other aspects of its monetary policy, eliminating the yield curved control program and the purchase of exchange-traded funds.

Promise to buy long-term government bonds.

However, the Bank of Japan also promised to buy longer-term government bonds as needed, and said it would keep terms favorable for the time being. The Japanese currency yen weakened slightly as the bank’s decision weakened slightly as traders took note of cautious comments from the Bank of Japan, indicating that it will remain cautious about further rate hikes. Japan’s Nikkei 225 index closed above 40,000 on Tuesday after the bank’s decision.