Japan Ends Negative Interest Rate Policy Amid Soaring Inflation

Japan's accommodative monetary policy has been a defining feature of its economic landscape since 2016. The Bank of Japan maintained a zero or negative interest rate for most of this period, with a major shift occurring in March 2024 when it ended its negative interest rate policy.

The policy rate was raised to 1.5 percent in December 2025 after remaining at 0.25 nearly the whole year. As of June 2026, it stood at 2.25 percent.

During this time, Japan's inflation dynamics underwent a significant transformation. After decades of subdued price growth, consumer inflation rose sharply from 2022 onward, reaching 4.5 percent in 2023 before easing to 2.8 percent in 2024.