Bank of Japan Raises Rate, Halts Emergency Policies

TOKYO—The Bank of Japan on Tuesday ended negative interest rates after eight years and unwound most of its unorthodox monetary easing policies, saying a new era of stable inflation is in sight in Japan.

The decision marks the end of a global era of negative interest rates that began in the 2010s. Other central banks that had introduced negative rates in the 2010s, including the European Central Bank and the Swiss National Bank , have already moved back into positive territory amid inflation triggered by the Covid-19 pandemic and the war in Ukraine.

For a generation, the Japanese central bank served as a laboratory for monetary-policy experimentation as it addressed the country’s chronic stagnation, which was marked by flat or falling prices.

On Tuesday, BOJ Gov. Kazuo Ueda said those policies have fulfilled their roles and the principal ones will be ended. The Bank of Japan is moving its key target for short-term rates to a range of 0% to 0.1%, its first rate increase since 2007.

Ueda said the move was justified by steadily rising wages and prices in Japan. The central bank “judged that sustainable and stable achievement of our 2% inflation goal has come into sight,” he said.

The BOJ said it removed a target for the yield on 10-year Japanese government bonds. And it is halting its purchases of assets such as stocks, real-estate investment trusts and corporate bonds that don’t typically go onto the books of central banks. The Bank of Japan has amassed the equivalent of hundreds of billions of dollars in such assets since the global financial crisis of 2008-09.

Market reaction was restrained because Bank of Japan officials had telegraphed their intentions. The Nikkei Stock Average closed up 0.7%, while the yen was down.

The Bank of Japan, which had maintained a negative policy rate since 2016, said it would continue buying government bonds.

“Accommodative financial conditions will likely continue, and these accommodative financial conditions will firmly support the economy and prices,” Ueda said at a news conference. He said he didn’t expect to raise interest rates rapidly.

Prime Minister Fumio Kishida welcomed the continuation of easy money, saying it was too soon to declare an end to deflation.

The BOJ had already begun to ease away from its unconventional policies. In September 2016, it set a target of around zero for the yield on 10-year government bonds. After initially enforcing that target strictly, the bank last year loosened its control , allowing the yield to move higher amid a surge in global bond yields. As of late Tuesday, the 10-year yield was 0.725%.

The Bank of Japan’s move to restore traditional monetary policy tools is one example of how Japan’s economy has recently reverted to conditions not seen in more than three decades.

In February, the Nikkei Stock Average hit a record for the first time in 34 years. Japan’s largest labor union said last week that major companies are planning to raise pay by an average of 5.28% this year, the largest increase since 1991.

However, the Bank of Japan’s economic assessment pointed to some warning signs. With China’s economy struggling recently , the BOJ said Japan’s economy “is expected to be under downward pressure stemming from a slowdown in the pace of recovery in overseas economies.”

Two of the BOJ’s nine-member policy board dissented from the decision to end negative rates, saying the economy’s recovery was too fragile to allow for a rate increase.

Katsutoshi Inadome, senior strategist at SuMi Trust, said the BOJ probably saw a window to act after the recent good news on wages, but he said there was a chance Tuesday’s rate increase was premature.

“In a textbook approach, this is timing the bank would have done better to avoid,” Inadome said. He pointed to sluggish consumption in Japan, which Ueda acknowledged as a risk.

Ueda said if the economy received shocks in the future, the central bank would consider using policy tools it has used previously.

“The Bank of Japan is unlikely to make additional rate increases because there will gradually appear more headwinds such as the lack of strength in prices,” said Mizuho Securities chief market economist Yasunari Ueno.

It’s go time for the highest-stakes mission at NASA in more than 50 years.

On April 1, the agency is set to launch four astronauts around the moon, the deepest human spaceflight since the final Apollo lunar landing in 1972.

The launch window for Artemis II , as the mission is called, opens at 6:24 p.m. ET.

National Aeronautics and Space Administration teams have been preparing the vehicles to depart from Florida’s Kennedy Space Center on the planned roughly 10-day trip. Crew members have trained for years for this moment.

Reid Wiseman, the NASA astronaut serving as mission commander, said he doesn’t fear taking the voyage. A widower, he does worry at times about what he is putting his daughters through.

“I could have a very comfortable life for them,” Wiseman said in an interview last September.

“But I’m also a human, and I see the spirit in their eyes that is burning in my soul too. And so we’ve just got to never stop going.”

Wiseman’s crewmates on Artemis II are NASA’s Victor Glover and Christina Koch, as well as Canadian Space Agency astronaut Jeremy Hansen.

Photo: NASA’s Artemis II SLS rocket and Orion spacecraft being rolled out at night. Miguel J. Rodriguez Carrillo/Getty Images

What are the goals for Artemis II?

The biggest one: Safely fly the crew on vehicles that have never carried astronauts before.

The towering Space Launch System rocket has the job of lofting a vehicle called Orion into space and on its way to the moon.

Orion is designed to carry the crew around the moon and back. Myriad systems on the ship—life support, communications, navigation—will be tested with the astronauts on board.

SLS and Orion don’t have much flight experience. The vehicles last flew in 2022, when the agency completed its uncrewed Artemis I mission .

How is the mission expected to unfold?

Artemis II will begin when SLS takes off from a launchpad in Florida with Orion stacked on top of it.

The so-called upper stage of SLS will later separate from the main part of the rocket with Orion attached, and use its engine to set up the latter vehicle for a push to the moon.

After Orion separates from the upper stage, it will conduct what is called a translunar injection—the engine firing that commits Orion to soaring out to the moon. It will fly to the moon over the course of a few days and travel around its far side.

Orion will face a tough return home after speeding through space. As it hits Earth’s atmosphere, Orion will be flying at 25,000 miles an hour and face temperatures of 5,000 degrees as it slows down. The capsule is designed to land under parachutes in the Pacific Ocean, not far from San Diego.

Water photo: NASA’s Orion capsule after its splash-down in the Pacific Ocean in 2022 for the Artemis I mission. Mario Tama/Press Pool

Is it possible Artemis II will be delayed?

Yes.

For safety reasons, the agency won’t launch if certain tough weather conditions roll through the Cape Canaveral, Fla., area. Delays caused by technical problems are possible, too. NASA has other dates identified for the mission if it doesn’t begin April 1.

Who are the astronauts flying on Artemis II?

The crew will be led by Wiseman, a retired Navy pilot who completed military deployments before joining NASA’s astronaut corps. He traveled to the International Space Station in 2014.

Two other astronauts will represent NASA during the mission: Glover, an experienced Navy pilot, and Koch, who began her career as an electrical engineer for the agency and once spent a year at a research station in the South Pole. Both have traveled to the space station before.

Hansen is a military pilot who joined Canada’s astronaut corps in 2009. He will be making his first trip to space.

Koch’s participation in Artemis II will mark the first time a woman has flown beyond orbits near Earth. Glover and Hansen will be the first African-American and non-American astronauts, respectively, to do the same.

What will the astronauts do during the flight?

The astronauts will evaluate how Orion flies, practice emergency procedures and capture images of the far side of the moon for scientific and exploration purposes (they may become the first humans to see parts of the far side of the lunar surface). Health-tracking projects of the astronauts are designed to inform future missions.

Those efforts will play out in Orion’s crew module, which has about two minivans worth of living area.

On board, the astronauts will spend about 30 minutes a day exercising, using a device that allows them to do dead lifts, rowing and more. Sleep will come in eight-hour stretches in hammocks.

There is a custom-made warmer for meals, with beef brisket and veggie quiche on the menu.

Each astronaut is permitted two flavored beverages a day, including coffee. The crew will hold one hourlong shared meal each day.

The Universal Waste Management System—that’s the toilet—uses air flow to pull fluid and solid waste away into containers.

What happens after Artemis II?

Assuming it goes well, NASA will march on to Artemis III, scheduled for next year. During that operation, NASA plans to launch Orion with crew members on board and have the ship practice docking with lunar-lander vehicles that Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin have been developing. The rendezvous operations will occur relatively close to Earth.

NASA hopes that its contractors and the agency itself are ready to attempt one or more lunar landing missions in 2028. Many current and former spaceflight officials are skeptical that timeline is feasible.

Bank of Japan Raises Rate, Halts Emergency Policies

Central bank says stable inflation is in sight and ends unconventional asset purchases

The lunar flyby would be the deepest humans have traveled in space in decades.