Bank of Japan ends negative interest rate era, and other economic stories to read this week

The Bank of Japan (BoJ) has ended eight years of negative interest rates, representing the country's first interest rate increase in nearly two decades.

Rates remain around zero, though, with the BoJ's overnight call rate set as its new policy rate, which is in a range of 0-0.1%.

"We reverted to a normal monetary policy targeting short-term interest rates, as with other central banks," BoJ Governor Kazuo Ueda said at a press conference after the decision.

"If trend inflation heightens a bit more, that may lead to an increase in short-term rates," he added but did not comment on the timing or pace of further rate increases.

It reverses a policy that had applied a 0.1% charge on some excess reserves held by financial institutions at the central bank.

The German economy was likely in recession in the first quarter of 2024, according to a regular economic update from the Bundesbank. Weak consumption and industrial demand have delayed any recovery.

Recent indicators do suggest more positive signs, but the central bank's report suggests another sluggish year for growth. "Industry in particular will likely remain in a weak phase," the Bundesbank said. "No major stimulus is expected from private consumption for the time being either."

It added that inflation is likely to fall further in the month ahead, but volatility is likely to persist.

UK inflation slowed in February, dropping from 4.0% in January to 3.4% last month.

China has left its benchmark lending rate unchanged, in a move expected by markets.

Eurozone business activity was close to growth in March, ahead of expectations.

South African consumer inflation increased for the second month in a row in February, rising 5.6% year-on-year.

International Monetary Fund Managing Director Kristalina Georgieva has warned that central banks must maintain their independence amidst political pressure to cut interest rates as elections take place around the world.

The Swiss National Bank has cut its core interest rate by 25 basis points, in a move that precedes many other international central banks.

Norway's central bank, however, has kept rates steady at 4.5%, as borrowing costs remain at a 16-year high.

New Zealand's economy contracted in the final three months of last year, putting it in a recession.

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