Historic turning point in Japan, stop to negative interest rates. What happens now?

Japan's central bank raised interest rates for the first time since 2007, ending the world's only negative rate regime.
The move was one of the most awaited by markets and investors.
However, the Bank of Japan warned that it does not intend to undertake aggressive increases in the cost of money, saying that it "expects accommodative financial conditions to be maintained for the time being", given the fragile growth of the world's fourth largest economy.
This shift makes Japan the latest power to emerge from negative rates and end an era in which policymakers around the world sought to support growth through cheap money and unconventional monetary tools.
The BoJ's decision has already impacted the Japanese markets, with potential effects, even in the medium to long term, on assets globally.
Bank of Japan changes course, the era of negative rates ends The Bank of Japan has ended eight years of negative interest rates.
Although the move was the first interest rate increase in 17 years, it remained in a still rather accommodative framework.
Rates, in fact, have remained stuck around zero as a fragile economic recovery forces the central bank to slow any further rise in borrowing costs, according to analysts.
Specifically, the bank raised short-term interest rates to around 0%-0.1% from -0.1%, according to its statement at the end of its two-day policy meeting in March.
The BoJ also abolished its radical yield curve control policy for Japanese government bonds, which limited long-term interest rates to around zero.
In a statement announcing the decision, the Bank of Japan also said it will continue to buy “roughly the same amount” of government bonds as before and will increase purchases if yields rise rapidly.
Instead, purchases of risky assets such as exchange-traded funds (ETFs) and Japanese real estate investment trusts will be halted.
“Today the BoJ took its first, timid step towards normalizing monetary policy.
The elimination of negative interest rates, in particular, signals the BOJ's confidence that Japan has emerged from the grip of deflation,” said Frederic Neumann, chief Asia economist at HSBC in Hong Kong.
The “new era” of positive interest rates is “a confirmation of the recovery of the Japanese economy,” said Charu Chanana, market strategist at Saxo Capital Markets Pte.
“Higher returns on savings and investments in Japan may fuel consumer spending power and create the conditions for Japanese stocks to extend their momentum." Market reaction Japanese shares were volatile and the Nikkei index closed at +0.66%.
The yen fell to nearly 150 per dollar as investors interpreted the BoJ's dovish guidance as a sign that the interest rate differential between Japan and the United States likely won't narrow much.
Expectations that the yen would outperform its counterparts this year had already faded.
Strategists earlier this month expected the currency to finish 2024 a few percent higher than where it started.
High rates and a strong currency in the United States have kept Japan's 10-year yields and the yen under pressure: the yield on 10-year US Treasuries is around 4.3%.
The momentum looks set to continue despite the BoJ's hike, given the continued strength of the US economy and the resilience of consumer spending there.
Additionally, Japan's central bank will continue to buy bonds and is committed to responding to any rapid rise in yields.
What happens with rising interest rates in Japan? The stakes are high.
A surge in bond yields would raise the cost of financing Japan's huge public debt which, with double the size of its economy, is the largest among advanced economies.
The demise of the world's last provider of low-cost funds could also shake up global financial markets as Japanese investors, who have piled up investments overseas in search of returns, may be preparing to move money back to their home country.
This would mean, for example, the sale of US government bonds and a shake-up in the global bond market.