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.

Luke Michel has already lived through two technology overhauls in his career, first desktop publishing in the 1980s and online publishing later on. But AI? He’s had enough.

So when his employer, the Dana-Farber Cancer Institute, made an early-retirement offer to some staff last year, the 68-year-old content strategist decided to speed up his exit. Before, he had expected to work a couple more years.

“The time and energy you have to devote to learning a whole new vocabulary and a whole new skill set, it wasn’t worth it,” he said.

It isn’t that he’s shunning artificial intelligence—he is learning Spanish with the help of Anthropic’s Claude. But, at this point, he’s less than eager to endure all the ways the technology promises to upend work.

“I just want to use it for my own purposes and not someone else’s,” he said.

After rising for decades and then hovering around 40% in the 2010s, the share of Americans over 55 years old in the workforce has slipped to 37.2%, the lowest level in more than 20 years.

The financial cushion of rising home equity and stock-market returns is driving some of the decline, economists and retirement advisers say.

But for some older professionals, money is only part of the equation.

They say they don’t want to spend the last years of their career going through the tumult of AI adoption, which has brought new tools, new expectations and a lot of uncertainty.

Many people retire when key elements of their work lives are disrupted at once, said Robert Laura , co-founder of the Retirement Coaches Association and an expert on the psychology of retirement.

“Maybe their autonomy is being challenged or changed, their friends are leaving the workplace, or they disagree with the company’s direction,” he said.

“When two or three of these things show up, that’s when people start to opt out.”

“AI is a big one,” he adds. “It disrupts their autonomy, their professionalism.”

Michel, whose work required overseeing and strategizing on website content, has been here before.

When desktop publishing arrived in the 1980s, he was a graphic designer using triangles and rubber cement.

The internet’s arrival changed everything again. Both developments required new skills, and he was energized by the challenge of learning alongside colleagues and peers.

It felt different this time around. “Your battery doesn’t hold a charge as long as it used to,” he said.

He would rather spend his energy volunteering, making art, going to operas and chairing the Council on Aging in North Andover, Mass., where he lives.

In an AARP survey last summer of 5,000 people 50 and over, 25% of those who planned to retire sooner than expected counted work stress and burnout as factors.

About half of those retired said they had left work at least partly because they had the financial security to do so.

In general, older Americans are less likely than younger counterparts to use AI, research shows.

About 30% of people from ages 30 to 49 said they used ChatGPT on the job, nearly double the share of those 50 and older, according to a 2025 Pew Research Center survey of more than 5,000 adults.

Baby boomers and members of Generation X also experienced the sharpest declines in confidence using AI technology, according to a ManpowerGroup survey of more than 13,900 workers in 19 countries.

“We as employers aren’t doing a good enough job saying (to older workers), we value the skills that you already have, so much so that we want to invest in you to help you do your job better,” says Becky Frankiewicz , ManpowerGroup’s chief strategy officer.

Jennifer Kerns’s misgivings about AI contributed to her departure last month from GitHub, where the 60-year-old worked as a program manager.

Coming from a family of artists, she said, it offends her that AI models train on the creative work of people who aren’t compensated for their intellectual property. And she worries about AI’s effect on people’s critical-thinking skills.

So she was dismayed when GitHub, a Microsoft-owned hosting service for software projects, began investing heavily in AI products and expecting employees to incorporate AI into much of their work. In employee-engagement surveys, the company had begun asking them to rate their AI usage on a scale of 1 to 5.

When it came time to write reports and reviews, colleagues would suggest that she use ChatGPT.

“I’d be like, ‘I have no idea how to use that and I have no interest in using AI to write anything for me,’” she said.

It would have been more prudent to work until she was closer to Medicare eligibility, she said. But by waiting until her children were out of college and some of her stock grants had vested, the math worked.

Her first act as a nonworking person: a solo trip to Scotland, where she took a darning workshop and learned how to repair sweaters.

“The opposite of AI,” she said.

Employers already under pressure to cut workers—such as in the tech industry—may welcome some of these retirements, said Gad Levanon , chief economist at Burning Glass Institute, which studies labor-market data.

“The more people retire, the fewer they have to let go,” he said.

Some of the savviest tech users are also balking at sticking around for the AI upheaval. Terry Grimm, who worked in IT for 40 years, retired from his senior software consultant role at 65 last May.

His firm had just been acquired by a bigger firm, which meant learning and integrating the parent company’s AI and other tech tools into his work.

Until then, Grimm expected he might work a couple more years, though he felt that he probably had enough saved to retire.

“I just got to the point where I was spending 40 hours at work and then 20 hours training and studying,” said Grimm, who has since moved with his wife from the Dallas area to a housing development on a golf course in El Dorado, Ark.

“I’m like, ‘I’ll let the younger guys do this.’”

Bank of Japan Raises Rate, Halts Emergency Policies

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

Their careers spanned the personal computing, internet and smartphone waves. But some older workers see AI’s arrival as the cue to exit.