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.

A wave of corporate warnings and technical disclosures has flooded the media, with headlines worrying over “swarms” of rogue artificial-intelligence agents launching “unprecedented” cyberattacks, outsmarting their makers, and inching toward a terrifying autonomy. The most revealing part of this narrative isn’t what the software did. It’s who is telling the story—and why. When corporate leaders publicly insist that the systems they financed, engineered and deployed are suddenly beyond their power to contain, skepticism isn’t only healthy; it is essential.

For years, Silicon Valley has drawn scrutiny from civil society and global regulators over tangible harms such as youth mental health deterioration and systematic privacy violations. Today, industry figures seem to be trying to change that public image. Loudly blowing the whistle on their own systems—just as two of the leading companies were preparing for massive initial public offerings—lets AI executives position themselves as a new generation of leaders who have come to terms with their societal responsibilities. They seem to want us to believe that they no longer want to “move fast and break things” but will instead stand as vigilant guardians between humanity and a technological apocalypse.

There is one glaring problem: Software doesn’t rebel. A mathematical model possesses neither intent, malice nor the will to defy its creators, let alone extinguish our species. AI is a human artifact, engineered for profit.

When an agentic model in an evaluation sandbox connects to an unauthorized server or executes an exploit, it hasn’t staged a coup. It has tried to meet the human-defined objectives set out before it through a path its designers failed to constrain. It’s the digital equivalent of the King Midas myth, in which the king’s ill-defined wish turns even his food and drink into gold.

That powerful experimental models were able to discover novel vulnerabilities and breach external systems isn’t a sign of a dangerous superintelligence but of human error or negligence. There is no sentient actor lurking in the weights to be reasoned with, feared or pacified. There are only human software engineers, product managers and corporate boards deciding which guardrails are worth the latency cost and which permissions can be skipped in the race to market.

Policymakers and voters need to resist AI exceptionalism. In any other discipline—from civil engineering to pharmaceuticals—courts and regulators treat a system failure as evidence of bad product design and inadequate safety testing. If an aircraft crashes, we focus on finding the engineering defect, correcting it, and enforcing established liability standards for the damage created.

By leaning on an anthropomorphic narrative, Silicon Valley attempts to repackage its specific human choices that led to experimental, powerful models behaving unexpectedly during tests as an existential peril. Elevating the issue to a cosmic scale leaves the public paralyzed and takes ordinary product accountability off the table.

In the cutthroat race for venture capital and market dominance, building guardrails slows down deployment. Grandstanding about uncontrollable power costs nothing and generates billions of dollars in free publicity, justifying stock prices, all while cultivating an aura of technological capability not only to build the frontier but also ultimately to rein it in.

Governments need to recognize regulatory capture when it stares them in the face. Tech leaders’ strategy looks transparent: Alarm Washington and Brussels into creating a regime in which only trillion-dollar incumbents with fully staffed compliance and safety departments can legally operate. By sitting at the policymakers’ tables before anyone else, these companies can help draft rules digging an impassable moat protecting them from open-source developers and upstart competitors, domestic or international. The real danger is in further concentrating the tech industry into the hands of only a few companies with deep pockets.

Beijing and Washington have brushed off those tech leaders’ calls, albeit for very different reasons. Chinese state media dismissed them as part of the “Cold War playbook” and intended to preserve U.S. dominance. Xi Jinping argued for exactly the opposite at the Brics Summit on Sept. 12, calling on Brics countries to “strengthen cooperation in the field of AI, encourage open source, openness, collaboration and sharing, and break new grounds and scale new heights.” President Trump, steeped in a doctrine of unfettered capitalism and technological supremacy, called fears that AI could destroy humanity a “hoax.” Vice President JD Vance warned that AI companies “begging the government to regulate them” looked like a “Trojan Horse.”

Striving to pursue its “European way” on AI and assert regulatory leadership, Europe, by contrast, welcomed the call. European Union President Ursula von der Leyen made this clear at the State of the EU speech last Wednesday and announced that the EU will invite “the main frontier labs for a discussion on how we can support ongoing industry efforts to pace the frontier.”

Europe has been here before. In an effort to lead global regulation and react to fears borne from ChatGPT, Europe rushed its landmark AI Act into law in 2024. Already the world’s most restrictive rulebook, the framework quickly proved too broad and complex to enforce. Stalled by implementation delays and concerns about European competitiveness, the EU postponed the law’s full rollout, leaving regulations uncertain.

AI should be regulated—risks exist and should be taken seriously. But governments need to act based on available evidence and verified facts, not corporate PR panic, the views of industry insiders, or the desire for quick political wins. The greatest danger facing society isn’t that software will awaken and overthrow its human masters. It is that we will allow the creators of the software to abdicate human responsibility for the systems they choose to build and help them pull up the ladder to market access behind them.

Bank of Japan Raises Rate, Halts Emergency Policies

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

AI doesn’t rebel—people design, deploy and profit from it. The real danger lies in allowing tech companies to escape accountability while shaping regulations that protect their dominance.