Defying the government, the Bank of Japan proved it is an independent body in the mould of the U.S. Federal Reserve. So far, the stock and currency markets are taking the rise in stride. The fear was that higher interest rates will eat into corporate earnings, slash investment spending and lead to job losses. Because of higher yields, the yen was supposed to strengthen, which could then price Japanese exports out of world markets and deprive the economy of one of its few bright spots. So far that hasn't happened and might not.
New numbers released last week suggest that Japan's economy is more robust than many thought.
It was the sixth consecutive quarter of growth. If so, the economy may be able to build on the momentum despite the rate hike. The question is whether the tiny rise is a symbolic gesture or the start of a round of increases. The BOJ says that ZIRP is unnatural. By zapping it, the bank is signalling that the Japanese economy is back to normal.