The Bank of Japan on Thursday ended its five-year-old ultraloose monetary policy, brushing aside concerns in the Cabinet and the ruling coalition that the nation has not yet overcome years of deflation.
In announcing the policy shift, the central bank also pledged to anchor short-term interest rates near zero to ease fears that an end to the so-called quantitative easing policy may trigger a spike in short-term rates and put a damper on the economy by raising the cost of housing loans and other borrowing.
The BOJ also decided on a new framework to prevent the market from falling into turmoil after the policy shift, saying medium- to long-term price stability should fall in an approximate range "between zero and 2 percent" as an inflation reference rate.