Japan's Era of Ultra-Cheap Money Ends: First Rate Hike in 30 Years

Japan's central bank has raised interest rates to their highest level in three decades. This marks a historic end to the country's long experiment with negative interest rates and massive economic stimulus. The Bank of Japan increased its key policy rate in its fourth hike this year. The move immediately pushed up government borrowing costs. Yields on 10-year Japanese government bonds have now reached their highest level since the 1990s. For years, Japan kept rates near zero to fight deflation, a period of falling prices that hurts growth. The new policy shift signals that bank officials now believe the economy is stable enough to support higher rates. This change impacts global finance. Japan's ultra-low rates had led investors to borrow yen cheaply to invest elsewhere. As this practice reverses, it could cause market volatility worldwide. Analysts say the move aims to control inflation without harming Japan's fragile economic recovery. Further rate increases are expected to be slow and cautious.