The Bank of Japan (BOJ) has ended eight years of negative interest rates, marking a significant shift in monetary policy. The BOJ's Policy Board, led by new Governor Kazuo Ueda, set the overnight call rate as its new target, guiding it within a range of 0-0.1%. This move signals a departure from the ultra-easy monetary policy that has characterized Japan's economy for years.
Japanese markets reacted with volatility to the BOJ's decision. The Nikkei index fluctuated between gains and losses, while the yen weakened against the dollar, indicating that the policy shift had been largely anticipated by investors.
Meanwhile, the Reserve Bank of Australia (RBA) held interest rates steady, but removed its previous bias towards further tightening. This decision suggests that the RBA is not ruling out the possibility of rate cuts in the future.
Global financial markets are closely watching the upcoming Federal Reserve (Fed) meeting, where policymakers are expected to hold rates steady. However, the market's focus will be on the Fed's updated economic projections and comments from Chair Jerome Powell. Recent inflation reports have led to a reduction in expectations for rate cuts this year, with traders now pricing in a 54.7% chance of an easing cycle starting in June.