The Bank of Japan is expected to end negative interest rates at its monetary policy meeting next week, sources close to the matter have said, in what would be the first hike in 17 years and a major departure from years of unorthodox monetary easing.

The development reflects growing confidence among policymakers that a virtuous cycle of wage growth and price hikes is in motion, a requisite for the BOJ to normalize its policy as the outcome of this year's labor-management pay negotiations is expected to be the best in about three decades.

The BOJ is scheduled to hold a two-day policy meeting from Monday amid market expectations that the central bank will remove the negative rate, which has been in place since 2016.