Japan's interest rates hit their highest level for 17 years.

Live from the UK, this is the Marketplace Morning Report from the BBC World Service.

In Fuliana Byrne, I'm Sarah Rogers. Good morning.

First to Japan, where the central bank has raised interest rates to 0.5%.

So what does it mean for the world's fourth largest economy? BBC's Mariko Oye is looking at this.

Hi, Mariko. Hello. So a very different picture to what we're seeing in other major economies.

Can you just explain a little bit what's happened in Japan? Basically, Japan has had falling prices,

known as deflation or very, very little inflation for decades.

So back in 1999, the Bank of Japan became the world's first central bank to cut interest rates to zero,

basically trying to encourage spending and investment, but that didn't really work.

So they went even further in 2016 by cutting rates

to below zero to minus 0.1%. But Japan is finally starting to see prices rise, partly because of

higher food and fuel prices started by the war in Ukraine. But because of that, the Bank of Japan

exited that negative interest rates

policy. In July, they raised it to 0.25%. But at the time, at the start of August, that really caused

a massive sell-off in the stock market, especially in Japan, but elsewhere as well. And as a result,

officials have been a little bit more cautious.

It's good news in terms of normalising the monetary policy of Japan. Not so good news if you have a

mortgage. So bad for borrowers, but potentially good news for the economy. Is there a worry, though,

that rates might rise too quickly? I don't think we'll see any major market reaction this time around.

And in terms of further rate hikes, I think a lot of economists are expecting more to come,

but they have been so cautious after that sell-off.

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