TOKYO: The Bank of Japan (BoJ) ended eight years of negative interest rates and other remnants of its unorthodox policy yesterday, making a historic shift away from a focus of reflating growth with decades of massive monetary stimulus.

While the move was Japan’s first interest rate hike in 17 years, it still keeps rates stuck around zero as a fragile economic recovery forces the central bank to go slow in any further rise in borrowing costs, analysts said.

The shift makes Japan the last central bank to exit negative rates and ends an era in which policymakers around the world sought to prop up growth through cheap money and unconventional monetary tools.

“The BoJ today (yesterday) took its first, tentative step towards policy normalisation,” said Frederic Neumann, chief Asia economist at HSBC in Hong Kong.

“The elimination of negative interest rates in particular signals the BoJ’s confidence that Japan has emerged from the grip of deflation.”

In a widely expected decision, the BoJ ditched a policy put in place since 2016 that applied a 0.1% charge on some excess reserves financial institutions parked with the central bank.

The BoJ set the overnight call rate as its new policy rate and decided to guide it in a range of 0%-0.1% partly by paying 0.1% interest to deposits at the central bank.