is frozen in time.

For almost three decades,

your salary doesn't budge,

the price of your unagi bowl doesn't change

and the interest rate on your home mortgage is closer to zero.

Well, that was the reality here in Japan.

We were used to the price of everything

staying pretty much the same.

But it wasn't always like this.

Since the end of World War II,

Japan has been Ground Zero

for some of the biggest experiments in economics.

Older Japanese like Tomiko, a pensioner

and Suetaka, who runs a real estate agency,

have experienced a rollercoaster of changes

throughout their lives.

Now, Japan's central bank has decided

it's time to end its latest experiment

and exit negative interest rates.

For the first time since 2007,

the Bank of Japan, or the BOJ, raised rates.

YCC. Gone.

The end of negative rates as well.

So how did Japan decide to manage its economy

so differently from the rest of the world?

And how is this massive shift going to disrupt

everyday lives across the country?

Japanese growth hasn't always been this stagnant.

At one point, the economy was growing so fast

that it looked like it was about to overtake the US

as the world's biggest.

Taro Kimura covers the Japanese economy for Bloomberg Economics.

Before, he used to work at the BOJ.

So here he is with a mini history lesson.

After the post-war devastation,

Japan achieved something called

economic miracle from the 1960s to early 1970s.

That growth was led by a huge domestic demand

because the middle class households were expanding.

And in the late 1980s, Japan's economy actually accounted for

about 10% of the world's total economy.

At the time, many were flush with cash and reckless spending was the norm.

By the end of the 1980s, the stock market was on the up and up,

hitting record highs.

What was crazier was the real estate price.

For example, the land price of Tokyo's Imperial Palace

was said to be equivalent

to the price of the state of California.

Then the bust came.

In the first of its shock moves,

the BOJ sharply raised interest rates in 1989,

trying to curb speculation and rein in inflation.

The government also introduced measures to cool the property sector.

Nikkei stock price index fell to half of its peak value,

and real estate prices also plunged.

That led to a long-term downturn.

Authorities had tried to pump the brakes,

but instead they sent the economy to a screeching halt.

People in Japan didn't experience

wage growth and inflation for about three decades.

That means one generation full of people.

I myself growing up in Japan

learned the concept of inflation from a macroeconomic textbook.

Living in the world in no inflation

makes people attached to a certain product with a certain price.

A small amount of inflation can help drive economic growth

by keeping money moving around.

Most economies target relatively mild inflation of about 2%.

But as you can see from the yellow,

Japan's inflation stayed below that for a long time.

As things got worse,

the Bank of Japan followed the typical playbook for central banks:

lowering interest rates.

You can see the Fed, for example,

slashed rates to cope with the fallout

from the 2008 financial crisis.

But the BOJ, for more than 20 years,

kept at it with its almost flat line,

but it didn't help lift the country out of deflation.

In 2013, the BOJ decided to do something drastic again.

It introduced the Quantitative and Qualitative Easing policy,

an unconventional move where

they basically print a lot of cash

and pump it into the market by aggressively buying Japanese government bonds.

It was successful at first,

but Japan faced deflation again a couple years later,

so the BOJ went back to its box of tricks.

In 2016, it adopted negative rates,

a move that divided economists.

The main goal was to deter saving and also

punish banks that hoarded cash.

But, that didn't really work, either.

In response, the BOJ invented something called yield curve control.

Yield curve control is an attempt that the BOJ

controls not only short-term, but also the long-term rates

so that businesses and households

don't have to worry about too much fluctuation in interest rates.

It could keep interest rates low

by threatening to buy bonds, without always having to actually buy them.

That still didn't solve everything.

Companies couldn't find enough profitable ways to invest their money in Japan.

Many ended up looking abroad for better returns,

so much so that Japan became the biggest foreign holder of US Treasury debt,

overtaking China.

Suddenly in 2022, all of that changed.

Japan finally hit its 2% inflation target.

The problem was what prompted it.

First it was higher energy costs due to the Ukraine war.

And second, a weaker yen.

Bank of Japan was continuing to

ease monetary policy to stimulate the economy

and even inflation.

However, other major central banks

hiked rates in order to fight inflation.

Eventually, it was external forces that

pushed Japan toward ending its experiments.

In other words, it was not the sort of inflation that Japan wanted,

because it wasn't coming from consumers spending more.

Wages stayed low, even as inflation

hit 4.3% in January 2023,

which was the fastest in decades.

But it still caused the yen to weaken,

boosting profits at companies like Sony and Toyota

which sell products abroad.

That finally brought about some signs of change.

The business leaders, who used to be reluctant to raise compensation

now started to become open to raising wages.

The main labor unions secured the biggest wage increases in 30 years.

So finally on March 19, 2024, the BOJ took a big step.

The Bank of Japan has ended negative interest rates,

17 years since the last hike.

They're scapping the yield curve control.

They're also going to essentially pair back

their purchase of ETFs.

Raising the interest rate from -0.1% to a range of 0-0.1%

doesn't seem like much, but it does put Japan

back in line with other economies.

We asked at the top that if Japan's negative rates experiment ends,

what now?

Well, here are some of the changes we can expect to see.

First, mortgages will get more expensive for the first time in decades.

And interest payments on the government's more than $8 trillion of debt,

which is about twice the size of the country's economy, will increase.

The same thing will happen to companies.

It could also propel the yen higher.

That means your trips to Japan could get more expensive.

And Japanese exports would take a hit too.

On the flip side, it can also make investing in Japan more lucrative.

Plus, cheaper fuel and food imports are good news for Japanese consumers.