A new golden age for Japanese banks comes with a catch

Photograph: Getty Images

Jun 18th 2026|Singapore|4 min read

FOR nearly 31 years, as Japan struggled with low growth and bouts of deflation, its benchmark interest rate began with a zero, sometimes with a minus in front of it. So the decision by the Bank of Japan (BoJ) on June 16th to raise it from 0.75% to 1% carried symbolic weight. Few Japanese businesses are happier to see the back of zero than banks, whose balance-sheets are reviving after three decades of punishing strain. Since the BoJ started raising rates in March 2024 the index of Japanese bank shares has more than doubled, far outpacing the broader stock market (see chart 1).