April global economy wrap: Japan’s interest rate, UK recovery, Boeing woes

livemint.com:

Mint’s Plain Facts section brings out an update on key global economic data to thread together the biggest developments in the world that are worth paying attention to. The accompanying analysis and charts explain how each story is creating ripples on the global stage, where it is headed in the coming weeks, and whether it can impact India. This time, we explain why the Bank of Japan has ended a long era of negative interest rates and what is causing financial stress to citizens of several countries.

It took two years for Japan to do what nearly every country in the world had already done—raise key policy interest rates to tame inflation. The country’s central bank raised its benchmark rate from (-)0.1% to a range of 0–0.1% as inflation repeatedly came in above the target of 2%. While other countries sharply cut their interest rate during the covid-19 pandemic, Japan’s decision to cut its interest rate to (-)0.1% had come way back in 2016, intending to stimulate its struggling economy.

The interest rate remained negative for eight years even as the country lost its tag of the world’s third-largest economy to Germany. High inflation in Japan has put the country in a tough spot now as economic activity continues to be weak and the hike in the interest rate, maybe the only one, could further impede the country’s efforts to sustain its mark on the world economy. A technical recession in the UK by the end of last year brought worries over a global slowdown but the new year may be different.