A turning point in Japan’s economy: The Bank of Japan hiked interest rates for the first time in 17 years on Tuesday, pushing its key interest rates to 0-0.1% from -0.1% — rates have been negative for eight years, the bank said in a statement (pdf). This marks a shift in its monetary easing policy which sought to encourage bank lending and restimulate Japan’s deflationary economy.

What prompted the rate hike? Japan’s inflation rate has held above 2% for over a year, prompting the BOJ to assert on Tuesday that its long-time goal of stable 2% inflation was “within sight.” The BOJ had also faced pressure to end its monetary easing cycle which has been viewed as one cause of the decline in the value of the JPY against the USD.

What next? “If trend inflation heightens a bit more, that may lead to an increase in short-term rates,” the central bank’s governor Kazuo Ueda said at a presser. The timeline for these rate hikes wasn’t specified.

The story got a lot of attention in the int’l press: New York Times | Reuters | Financial Times | WallStreet Journal | BBC.

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THE MARKET THIS MORNING-

It looks a lot like the start of most trading day before the Fed speaks: Asian shares are mixed slipped at the opening bell and have since made up their losses, with all four major benchmarks we track (the Nikkei, Hang Seng, Shanghai Composite, and Kospi) in the green at dispatch time. US and European futures were down slightly at dispatch time this morning as traders wait for the Federal Open Markets Committee to wrap up its two-day meeting.

EGX30

28,676

-1.4% (YTD: +15.2%)

USD (CBE)

Buy 47.01

Sell 47.15

USD at CIB

Buy 47.04

Sell 47.14

Interest rates CBE

27.25% deposit

28.25% lending

Tadawul

12,804

+0.3% (YTD: +7.0%)

ADX

9,259

-0.3% (YTD: -3.3%)

DFM

4,273

-0.1% (YTD: +5.3%)

S&P 500

5,179

+0.6% (YTD: +8.6%)

FTSE 100

7,738

+0.2% (YTD: +0.1%)

Euro Stoxx 50

5,008

+0.5% (YTD: +10.8%)

Brent crude

USD 87.38

+0.6%

Natural gas (Nymex)

USD 1.76

+0.8%

Gold

USD 2,159

+0.1%

BTC

USD 62,738

-7.0% (YTD: +51.0%)

THE CLOSING BELL-

The EGX30 fell 1.4% at today’s close on turnover of EGP 4.0 bn (18.8% below the 90-day average). Foreign investors were net sellers. The index is up 15.2% YTD.

In the green: E-finance (+10.6%), Orascom Development Egypt (+6.2%), and Abu Qir Fertilizers (+5.7%).

In the red: TMG Holding (-6.3%), Juhayna (-4.7%), and CIB (-3.6%).

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