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.

Administrative cowardice. Rampant cheating. The soaking and scamming of undergrads and grad students. Performative wokeism. Intensifying competition for international tuition dollars from an expansive China.

These are either the latest dire headlines about American higher ed or the myriad subplots of “Lords of Serendipity,” an ambitious new novel by Randy Boyagoda. Unlike most campus fiction, its scope extends well beyond the cloister of the liberal arts classroom to whammy the entire university system, from its financial model to its function within a globalized economy. Along the way, it skewers its lightning-rod targets with a precision too sharp to be considered entirely fictional.

That its author is not only well-versed in satire, having written four other novels in the genre, but is also a professor of English at the University of Toronto and an experienced college administrator, further blurs the lines between comic fiction and brutal fact. It’s the kind of no-holds-barred book only a consummate insider would know to write—but only one who is also conveniently outside the American university system could get away with writing.

“This is someone who’s got the inside dope on what can go on at universities, especially with international students, and what kind of con games are going on,” said Margaret Atwood, a friend and fellow Torontonian.

The novel, like Boyagoda himself, is often very funny—even as the dilemmas its characters face read as tragedy. Its cast includes the bickering members of a Sri Lankan hotel cleaner’s family, insecure American freshmen, dead-end third-tier college professors and their highflying Ivy League counterparts and dispirited university functionaries. An old-fashioned Dickensian tale, it sweeps across continents and campuses, from a classic liberal-arts college to a stand-in for Harvard University to an urban technical school to the dilapidated buildings of a state-run university in Sri Lanka.

“I’m a joyful person,” Boyagoda said in an interview, though he prefers to see his outlook on academia as “hopeful” rather than optimistic. He smiles and laughs frequently. He bikes everywhere. He derives energy from his students and from his four daughters, ages 14 to 20. They help him and his American wife, Anna, also an educator, care for Boyagoda’s father, an immigrant from Sri Lanka who has dementia and lives with the family.

Randy Boyagoda speaks at a panel discussion. — Randy Boyagoda taking part in a panel discussion at the University of Toronto in 2024. Polina Teif/University of Toronto

The germ of the novel came to Boyagoda during the pandemic, when he was serving as a vice-dean. An urban legend was circulating about a statistics grad student selling passing grades to international students. The cheating scheme itself may well have been apocryphal, but it felt tantalizingly plausible.

“As a novelist, it stayed with me,” Boyagoda said. “Who would sell grades for a stats course? Why would someone buy grades? What’s motivating them? Why wouldn’t the university be doing something about it?” What he didn’t want to do, he explained, was write “another novel about a creative writing professor and his drama with students.”

In addition to writing novels—the first of which was a finalist for Canada’s prestigious Giller Prize; he’s written eight books in total—Boyagoda teaches literature full-time. For his students next semester, kids raised in a purportedly “post-literature era,” he’s assigning three 700-page novels, he noted mischievously, books by George Eliot, Ralph Ellison and Kiran Desai.

On RateMyProfessors, students remark on Boyagoda’s heavy assignments, tough grading and distaste for cellphones, but also hail his “comedy.” When alerted to these reviews, Boyagoda laughed. “Guilty as charged,” he said.

“Randy’s one of those people in academia who is very well educated but doesn’t have an ounce of superiority about him,” said John Irving, who frequently guest lectures in Boyagoda’s classroom. “It’s amazing to see how willing students are to talk in his classrooms, how little afraid they feel of being mocked or put down—he gets complete candor out of them.”

Negotiating competing interests seems to come naturally to him. Like many college campuses, after the Oct. 7 Hamas attack on Israel, the University of Toronto was embroiled in protests, encampments and discord; part of the school’s response was to convene a working group on civil discourse. Boyagoda was put in charge, serving for two years. It’s the kind of thankless task many professors would flee from, but Boyagoda relished the prospect and thinks the group, which is ongoing, made progress.

He has since pivoted to another formidable academic concern: the waning prestige of the humanities. In July, Boyagoda became the director of the Jackman Humanities Institute and special advisor on the humanities to the dean of arts and science. This fall, he is starting a series of gatherings he calls the Dead Book Club. (Dead writers feature heavily among his favorites: St. Augustine, Dante, William Faulkner, Evelyn Waugh, Saul Bellow.)

“The goal is to encourage students to read for its own sake and have conversation for its own sake,” Boyagoda said. “The importance of the humanities will be revealed to those who participate.”

Illustration of the book cover for "Lords of Serendipity" by Randy Boyagoda, depicting a woman wearing a hat with various buildings on top, against a blue background with a white airplane.

“Lords of Serendipity,” which publishes next week, reflects Boyagoda’s commitment to the pursuit of knowledge: “I’m supposed to say I learn more from my students than they do from me, but no,” Boyagoda said. “I enjoy sharing my excitement and joy about literature and ideas. There are these moments when you are teaching and you can see someone’s face change because they didn’t know something and then they did. That moment when you’re actually watch someone enlarge themselves is deeply satisfying.”

In literary circles, Boyagoda is often referred to as a Catholic novelist, a description he embraces. “A novelist willing to give shape and voice to contemporary religious experience is needed,” Boyagoda said. “I understand myself as a Catholic novelist, provided that I’m not only a Catholic novelist, I’m also a South Asian novelist and I’m a Canadian novelist. I don’t want to be captive to one label.”

His characters, he said, are subjected to what he calls “Graham Greene character situations.”

“They are trying to do good in a fallen world and realize the most they can do is less harm than someone else would do in that same role,” he explained. “They have to accept they are complicit in something that provides some good thing to others. It’s a very Graham Greene way of thinking about sacrifice.”

The campus green they inhabit is a febrile zone in which lofty ideals and cynicism regularly collide. It’s a place where a traditional holiday college celebration is now an occasion for political protest. Kids freely police one another inside and out of the classroom with social media their constant, ready weapon of choice. International students, knowing their family’s financial futures hinge on their degrees, operate in terror of failure and deportation.

Early readers of the book include Gary Shteyngart and Junot Diaz, both of whom have taught at universities and written comic novels. They each contacted Boyagoda midway through to say, in essence, “You nailed it.”

As biting as “Lords of Serendipity” can be, Boyagoda’s faith in higher education remains undaunted.

“It’s absurd that we live in societies that make the decision to take people between the ages of 18 and 22, when they are most physically capable of contributing to our nations and communities, and tell them, ‘Go away for four years, and read and learn and have conversations,’” he said. “I want students to be aware of what an incredible privilege that is.”

Corrections & Amplifications
Randy Boyagoda is a special advisor on the humanities to the dean of arts and science at the University of Toronto. An earlier version of this article incorrectly said he is a special adviser to the dean of humanities. (Corrected on Sept. 2)

Bank of Japan Raises Rate, Halts Emergency Policies

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

Randy Boyagoda’s new novel, “Lords of Serendipity,” delivers a biting satire of cheating, politics and dysfunction across modern universities.