Bank of Japan ends era of negative interest rates after 17 years

In 2022, money.pl highlighted that Japan, the world's third-largest economy and a significant foreign investor in Poland outside of European countries, was dealing with several issues, including a weak currency.

This decision came as the country's largest employers started increasing their employees' salaries at the beginning of March to assist them in coping with the rising cost of living in Japan, as reported by Nobuko Kobayashi from consulting firm EY-Panthenon to the BBC.

In March, salaries at Japan's largest firms rose by 5.28% year-over-year, the largest increase in three decades. Up until now, the cost of living in Japan has been relatively stable, sometimes even decreasing, which is why salaries had not seen significant increases.

"It's beneficial for Japan to stimulate local productivity and demand. However, it's problematic if the inflation is driven by external factors, such as wars or disruptions in supply chains," Kobayashi remarked.

During the COVID-19 pandemic, central banks globally reduced interest rates significantly to prevent economic recession. Some banks, like the European Central Bank and the Swiss National Bank, adopted negative interest rates during this period. After the pandemic, in an effort to curb rising prices, central banks around the world, including in the USA and the United Kingdom, started to aggressively increase interest rates.