Bank of Japan ends the world's only negative rates regime in a historic move, abandons yield curve control

Japan's central bank raised interest rates on Tuesday for the first time since 2007, ending the world's only negative rates regime and other unconventional policy easing measures enacted over the course of the last few decades to combat deflation.

These changes mark a historic shift and represent the sharpest pull back in one of the most aggressive monetary easing exercises in the world, which was aimed at reflating prices in the Japanese economy. The BOJ's actions also precede the U.S. Federal Reserve's interest rate decision later this week.

"The likelihood of inflation stably achieving our target has been heightening ... the likelihood reached a certain threshold that resulted in today's decision," BOJ Governor Kazuo Ueda said at a press conference after the central bank's decision, according to a translation provided by Reuters.

The Bank of Japan though cautioned it's not about to embark on aggressive rate hikes, saying that it "anticipates that accommodative financial conditions will be maintained for the time being," given the fragile growth in the world's fourth-largest economy.

"If the likelihood heightens further and trend inflation accelerates a bit more, that will lead to a further increase in short-term rates," Ueda said. He added though there is still "some distance for inflation expectations to reach 2%."

The BOJ raised its short-term interest rates to around 0% to 0.1% from -0.1% at the end of its two-day March policy meeting. Japan's negative rates regime had been in place since 2016.

It also abolished its radical yield curve control policy for Japanese sovereign bonds, which the central bank has employed to target longer-term interest rates by buying and selling bonds as necessary.

The central bank though will