The Bank of Japan's decision to end its five-year-old "quantitative easing" monetary policy Thursday marks an end to the era of low interest rates -- or excess liquidity -- around the world.
Although the change will not lead to an immediate jump in interest rates from their near-zero levels, analysts expect the BOJ to begin raising rates by year's end or in early 2007, the first time in years that the central banks of Japan, the United States and the 12-nation euro zone will have tightened credits in tandem.
"The BOJ's action indicates the world has finally entered a phase of credit-tightening, bidding . . . farewell to the low interest rate era," said Eisuke Sakakibara, former vice finance minister for international affairs.