Bank of Japan Raises Rate, Halts Emergency Policies
Central bank says stable inflation is in sight and ends unconventional asset purchases
3 min
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.
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Overall, the season showed that share prices react less to whether profits rose or fell than to the gap between results and expectations
5 min
Reporting season has once again reminded investors that a strong profit does not guarantee a rising share price, and a large loss does not always trigger a sell-off. What matters most is how each result compares with expectations and, increasingly, what management says about the year ahead. During the August 2026 season, companies offering credible turnarounds or unexpectedly strong guidance were rewarded handsomely, while those flagging weaker margins, slowing demand or greater uncertainty were punished.
The following ranking draws on Morningstar’s review of 164 ASX-listed companies and measures each company’s share-price movement on the day it reported. This captures the market’s immediate response to the earnings announcement, before subsequent economic developments, dividends and company-specific news cloud the picture. Here are the five biggest winners, and the five hardest-hit losers, of the season so far.
The five winners
1. Bapcor (ASX:BAP): +41.0%
Bapcor delivered reporting season’s largest relief rally after presenting early evidence that its troubled automotive-parts business was stabilising. Although underlying revenue fell 1.8% to $1.92 billion and underlying NPAT collapsed 85% to $10.8 million, underlying EBITDA of $152.5 million exceeded guidance.
More importantly, working-capital initiatives released $68.5 million in the second half, lifting cash conversion to 109.4% and reducing net debt by 63% to $135 million. The statutory loss was $431.6 million, largely because of non-cash impairments. Investors focused on improving operational momentum, stronger liquidity and management’s expectation of modest FY27 revenue growth.
2. Zip Co (ASX:ZIP): +18.2%
Zip comfortably surpassed its FY26 targets, sending the buy-now-pay-later provider’s shares sharply higher. Transaction volume rose 23% to $16.7 billion, while cash earnings before tax, depreciation and amortisation jumped 58% to a record $268.9 million. Statutory profit climbed 46% to $116.4 million, and the cash operating margin expanded by 4.2 percentage points to 20%.
The strongest signal was guidance for FY27 cash earnings of $340 million—around 26% growth and above analysts’ forecasts. US transaction volume increased 42.5% and now represents three-quarters of group volume, offsetting weaker customer activity in Australia.
3. CSL (ASX:CSL): +17.3%
CSL’s result was hardly spectacular in isolation, but it cleared a market bar that had fallen dramatically following earlier downgrades and restructuring announcements. Underlying NPATA was US$3.1 billion, down 2% in constant-currency terms, while operating cash flow reached US$3.51 billion.
CSL maintained its full-year dividend at US$2.92 per share and completed a A$1 billion buyback. The real catalyst was FY27 guidance for approximately 5% underlying profit growth, compared with market expectations closer to 2%. After an extended period of earnings disappointments, investors interpreted the outlook as evidence that CSL’s core plasma business was approaching a sustainable recovery.
4. Judo Capital (ASX:JDO): +16.9%
Judo Capital demonstrated strong operating leverage as its specialist business-lending franchise expanded. Full-year profit before tax rose 34% to $168.1 million, while pre-provision profit increased 42%. Gross loans and advances grew 18% to $14.7 billion, reaching the top of the bank’s guidance range and comfortably exceeding broader system growth.
Deposits increased 24% to $12.2 billion, return on equity improved by 1.1 percentage points to 6.4%, and earnings per share rose 29% to 9.9 cents. Reaffirmation of the FY27 outlook gave investors confidence that loan growth could continue without sacrificing margins or credit quality.
5. Super Retail Group (ASX:SUL): +15.8%
The owner of Supercheap Auto, rebel, BCF and Macpac reported record sales of $4.2 billion, up 3.2%, despite cautious discretionary spending. Profitability went backwards: normalised profit before tax fell 7% to $306 million and normalised NPAT declined 2.8% to $226 million as transformation spending weighed on margins. Nevertheless, the result exceeded subdued expectations, online sales grew 5.3% and membership across the group’s loyalty programs reached 13.1 million. Investors were also encouraged by positive early FY27 trading, stable gross margins and continued market-share gains. A fully franked 33-cent final dividend added to the appeal.
The five losers
1. Hansen Technologies (ASX:HSN): –21.2%
Hansen’s historic result met expectations, but investors recoiled from its outlook. The utility and communications software provider achieved an underlying EBITDA margin of 31%, exceeding its 30% target, while generating strong cash flow. However, management designated FY27 an “investment and transition year”, signalling a roughly five-percentage-point margin contraction as spending on products, sales capabilities and organisational changes increased.
Revenue had already been broadly flat, leaving investors concerned that the investment program would depress earnings before new growth appeared. Leadership changes, including the chief executive’s departure, added uncertainty. Management expects revenue growth and margins above 30% to return in FY28, but the market was unwilling to wait.
2. Life360 (ASX:360): –19.4%
Life360’s headline growth was impressive: quarterly revenue rose 38% to US$159 million, subscription revenue increased 31%, and adjusted EBITDA climbed 53% to US$31.1 million. Monthly active users reached 102.4 million and paying circles grew 27% to 3.2 million. The sell-off reflected expectations rather than a collapsing business.
Net income fell 18%, the net margin contracted from 6% to 3%, hardware shipments dropped 18%, and full-year EBITDA guidance was merely maintained. After a strong valuation run, investors wanted a larger upgrade and clearer evidence that heavy investment in advertising, international expansion and artificial intelligence would generate additional earnings.
3. PEXA Group (ASX:PXA): –17.0%
PEXA reported a 7% increase in continuing-operations revenue and 12% EBITDA growth to $152 million, accompanied by a two-percentage-point margin expansion. Free cash flow increased 39%, suggesting the core Australian electronic-conveyancing platform remained highly profitable. Investors instead concentrated on management’s warning that property-transfer volumes could decline, alongside regulatory uncertainty surrounding the fees PEXA can charge.
The company is also continuing to invest heavily in its loss-making international expansion. Morningstar considered the market reaction excessive, arguing that structural transfer-volume assumptions had not materially changed, but the combination of softer near-term activity and regulatory risk overwhelmed the respectable headline numbers.
4. SEEK (ASX:SEK): –14.3%
SEEK produced solid FY26 figures, including 10% revenue growth to $1.20 billion, a 15% rise in EBITDA and 28% growth in adjusted earnings per share. It also lifted its fully franked annual dividend by 13% to a record 52 cents. Those achievements were overshadowed by falling paid job-ad volumes and cautious FY27 assumptions.
The statutory accounts included a $201 million loss from the SEEK Growth Fund and $377 million of significant items, making the headline result considerably less attractive. Investors were particularly concerned that economic weakness could limit volumes while the company continued investing in platform integration and artificial-intelligence products.
5. JB Hi-Fi (ASX:JBH): –12.3%
JB Hi-Fi’s full-year result was broadly respectable, with group sales rising 5% to $11.1 billion and underlying earnings per share increasing 6% to $4.48. The damage came from its current-trading update. Australian sales were almost flat during the June quarter and deteriorated further in July, while earnings in the core Australian electronics business fell 3.6%.
Housing-related categories were particularly weak as higher living costs and interest rates constrained household budgets. With JB Hi-Fi entering the season on a demanding valuation, an in-line historic result was not sufficient: the loss of sales momentum prompted investors to rapidly reduce their expectations for FY27.
Overall, the season showed that share prices react less to whether profits rose or fell than to the gap between results and expectations. Bapcor was rewarded for being less troubled than feared, while several fundamentally profitable companies were punished because their outlooks failed to justify elevated valuations.
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