Japan: The central bank increased interest rates for the first time in 17 years

The Central Bank of Japan (BOJ) increased interest rates from -0.1%. to the range of 0.0-0.1 percent This is the first such decision in 17 years. The rise in interest rates in Japan means there is no longer a country in the world with negative interest rates.

The decision followed a move by the country’s largest employers to increase wages of their employees since the beginning of March to help them fight the rising cost of living in Japan, Nobuko Kobayashi from the consulting company EY-Panthenon told the BBC.

In March, wages in the largest Japanese companies increased by 5.28%. on an annual basis, which is the largest increase in three decades. So far, the cost of living in Japan has not increased rapidly, in fact it has sometimes fallen, which is why wages have remained stable and not increased.

“It’s good if Japan can stimulate local productivity and demand; it will be bad if external factors, such as wars or interruptions in supply chains, remain the sources of inflation,” Kobayashi commented.

During the COVID-19 pandemic, central banks around the world have sharply cut interest rates to save the economy from recession. Some banks, including The European Central Bank and the Swiss Central Bank then introduced negative interest rates. After the pandemic, to stop price increases, central banks around the world, including in the USA and Great Britain, began to aggressively raise interest rates. (PAP)

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