The Bank of Japan raised the unsecured overnight call rate from virtually zero to 0.25 percent at the end of its July 13-14 Policy Board meeting and hiked the official discount rate from 0.1 percent to 0.4 percent.
The hike, which had been anticipated since the central bank lifted the quantitative easing policy in March, ended the 5-year, 4-month-old "zero-interest-rate" policy that had been in effect since March 2001.
The move effectively gives the central bank access to its two major policy tools -- interest rates and liquidity adjustments -- and gives it room to lower interest rates if the economy again takes a turn for the worse.
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