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Japan 2024: The end of negative rates and the return to monetary normality
How the Bank of Japan abandoned its negative interest rate policy after 8 years — and what it meant for global markets
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MarketPedia Editorial
10 min read·March 19, 2024
In March 2024, the Bank of Japan raised rates for the first time since 2007, abandoning its negative interest rate policy. A historic moment with massive global implications through the carry trade.
Eight years of negative rates
Since January 2016, the Bank of Japan had maintained negative rates (-0.1%) in an attempt to combat chronic deflation. It was one of the most extreme monetary policy experiments in modern history.
The historic decision
On March 19, 2024, the BOJ raised rates from -0.1% to 0-0.1% — the first hike since 2007. The yen appreciated. The carry trade began to unwind, contributing to the August 2024 market crash.
Lessons
- Extreme monetary policies leave complex legacies.
- Japan is the laboratory of monetary policy.
- The yen carry trade was a hidden tension in the global system.
# Japan# BOJ# Negative Rates# 2024# Yen# Monetary Policy