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Bank of Japan ends era of negative interest rates

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Bank of Japan ends era of negative interest rates

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The Bank of Japan has ended an era of negative interest rates, raising borrowing costs for the first time since 2007 in a historic shift as the country puts decades of deflation behind it.

Kazuo Ueda, the BoJ governor, brought an end to more than a decade of ultra-loose monetary policy, abandoning a swath of easing measures that were put in place to stimulate Asia’s most advanced economy.

Following a 7-2 majority vote the BoJ said it would guide the overnight interest rate to remain in a range of about zero to 0.1 per cent, making it the last central bank to end the use of negative rates as a monetary policy tool. Its benchmark rate was previously minus 0.1 per cent.

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The BoJ turned to negative interest rates in 2016 as it tried to encourage banks to lend more in order to generate spending and contain the risks of a global economic slowdown.

Tuesday’s policy is likely over time to trigger shifts in global investment flows, as domestic yields become more attractive to Japanese investors, and comes as signs emerge of broader change in the Japanese economy.

Workers at some of Japan’s largest companies have secured their biggest pay rise since 1991, giving Ueda enough confidence that mild inflation will continue — a goal that has been central to the bank’s policies for years.

More companies are also passing on inflation costs to consumers and labour shortages are contributing to higher wages.

Investors have also grown more confident in the economy’s prospects. In February the Nikkei 225 stock index finally surpassed the level reached 34 years ago.

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The yen weakened 0.8 per cent against the US dollar to ¥150.33 after the BoJ’s move. The Nikkei 225 stock index closed 0.7 per cent higher on the day while the broader Topix index closed up 1.1 per cent.

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Despite the return to positive interest rates, BoJ officials do not see the first increase as a signal that more will quickly follow.

Inflation, which was sparked by a rise in imported energy and food prices, is well beyond its peak. Core inflation, which excludes volatile fresh food prices, slowed in January for the third straight month.

“Given the current outlook for economic activity and prices, the bank anticipates that accommodative financial conditions will be maintained for the time being,” the BoJ said.

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On Tuesday the central bank also removed its yield curve controls, another policy put in place in 2016 to reinforce its massive monetary easing measures by capping the yields of 10-year Japanese government bonds.

The BoJ said it would maintain its policy of buying about ¥6tn ($40bn) a month in Japanese government bonds, a pledge that underscores continuing weakness in the economy as household consumption remains sluggish.

But it will discontinue purchases of exchange traded funds and Japanese real estate investment trusts.

As part of the new framework, the BoJ will apply an interest rate of 0.1 per cent to deposits held with the central bank, removing a complicated three-tier system of borrowing costs that was adopted to limit the negative rate policy’s hit to commercial banks’ earnings.

While the end to negative interests rates was widely expected, economists had been divided on how far the BoJ would go in scrapping other measures such as yield curve control and ETF purchases.

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Sayuri Shirai, a former BoJ board member who opposed the introduction of negative interest rates in 2016, said that because economic conditions were not yet in place for additional rate increases, the BoJ appeared to have decided it only had one chance to act.

“We have to give credit to Mr Ueda for his resolve and boldness. Instead of doing it gradually, he just quit everything altogether and that also likely means that this is it,” she said.

Ueda’s decision sparked opposition from two BoJ board members, with one arguing that it should have avoided removing both negative interest rates and yield curve controls until the “virtuous cycle” between wages and prices had become more solid.

Additional reporting by William Sandlund in Hong Kong

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The Supreme Court says the U.S. can turn away asylum seekers at the border

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The Supreme Court says the U.S. can turn away asylum seekers at the border

The U.S. Supreme Court

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The U.S. Supreme Court on Thursday handed the Trump administration a tool that could make it far more difficult for asylum seekers to enter the United States.

Asylum is a form of legal protection available to people fleeing persecution in their home countries if they meet certain criteria. Under U.S. law, an asylum seeker who “arrives in” the U.S. is entitled to apply for asylum and generally cannot be removed from the country until their asylum application is processed. 

By a 6-3 vote, the high court ruled that federal law allows the government to stop asylum seekers from physically setting foot in the country, effectively keeping them from applying for asylum. 

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The Obama administration was the first to try stemming the flow of asylum seekers that way. But the lower courts blocked the policy on grounds that it violated federal law by denying asylum to people who otherwise would have qualified for it, had they been permitted to literally put one foot over the border.

The Trump administration, however, sought to revive the policy, contending that the lower court’s ruling “deprives the Executive Branch of a critical tool for addressing border surges and preventing overcrowding at ports of entry.” And on Thursday, the Supreme Court agreed.

Writing for the majority, Justice Samuel Alito ruled that because asylum seekers are not in the U.S. when they are turned away at the border, they did not “arrive in” the country. Therefore, he continued, the legal protections for asylum seekers have not kicked in.

Writing for the liberal dissenters, Justice Sonia Sotomayor noted that Border Patrol agents speak with all immigrants at legal entry points and speaking with an agent is effectively the first step in “arriving in” the U.S.

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Federal judge halts Trump’s election executive order seeking to create a federal voter list

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Federal judge halts Trump’s election executive order seeking to create a federal voter list

BOSTON (AP) — A federal judge on Thursday halted President Donald Trump’s executive order that sought to create a federal voter list and limit who can receive a mail ballot.

U.S. District Court Judge Indira Talwani, who was nominated by Democratic President Barack Obama, sided with a coalition of nearly two dozen states that challenged the Republican president’s order in granting a summary judgment. Her ruling applies to this year’s midterm election cycle.

Plaintiffs argued in two lawsuits, both filed in federal court in Boston, that Trump’s order should be found unconstitutional because the states and Congress, not the president, have the power to set election rules. The judge agreed, noting in her ruling that the provisions of Trump’s order “unconstitutionally violate the separation of powers.”

It was the second ruling in as many days against executive orders Trump has signed seeking oversight of the nation’s elections. A separate ruling Wednesday prohibited an executive order he had signed last year that would have required people to show documents proving their citizenship when registering to vote.

The administration, in its motions to dismiss the lawsuits challenging the order seeking to establish a federal voter list, argued that the motions are premature and that plaintiffs lacked the legal basis to bring their claim based on the Administrative Procedure Act, which governs how federal agencies develop and issue regulations.

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But in an interim order before Thursday’s ruling, Talwani said the motions pertaining to this year’s election cycle were relevant: “In light of the EO’s specific deadlines over the next three months, and the reality that elections will be occurring throughout this period with the November 3, 2026 midterm occurring in just five months, postponing judicial review is impracticable and may inflict significant hardship on Plaintiffs,” she wrote. That order denied the Trump administration’s motion to dismiss the challenges.

Trump’s executive order, the second one aimed at elections during his second term, comes as he continues to raise the specter of widespread voting by noncitizens as a reason to change election rules. But states already have detailed processes aimed at keeping their voter rolls accurate, and voting by noncitizens has been shown to be rare. It also is a felony that can be punishable by deportation.

Trump issued his second order in March after a bill he supported to overhaul voting stalled in Congress. The order would have had the federal government create a list of eligible voters and then directed the U.S. Postal Service to deliver mail ballots only to those on the list. Election officials argued that it was ripe for abuse and could cause chaos, and the postal union has objected to the idea of mail carriers policing ballots.

The Postal Service has published a proposed rule required by Trump’s executive order in the Federal Register. Among other things, the rule would not apply to primary elections or overseas ballots.

The lawsuit seeking summary judgment was filed by Democratic attorneys general representing 22 states and the District of Columbia. Also signing on were attorneys representing Democratic Gov. Josh Shapiro of Pennsylvania, which has a Republican attorney general.

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The states also told the court that the move imposes a costly burden on election officials to comply and would spread fear about the possibility of prosecution. Stephen Pezzi, a lawyer for the Trump administration, had argued that no one would be prosecuted for violating the order.

In a separate lawsuit filed against the executive order, a federal judge in Washington, D.C., in May agreed with the Trump administration that it was too early to block the order because it had yet to be implemented. That lawsuit was brought by Democratic and civil rights groups, who have appealed.

Since his 2020 presidential election loss to Democrat Joe Biden, Trump has groundlessly claimed mail voting is rife with fraud and has launched a federal investigation into that year’s vote, even though repeated audits and investigations, including ones run by Republicans, found it was free of widespread fraud. Trump also has said he wants to “take over” election administration in Democratic areas.

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With a Round of 32 spot already clinched, the U.S. takes on Turkey in the World Cup

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With a Round of 32 spot already clinched, the U.S. takes on Turkey in the World Cup

Folarin Balogun (r) of the U.S. celebrates scoring his team’s second goal with Weston McKennie during their World Cup match against Paraguay on June 12 in Inglewood, Calif. The U.S. defeated Paraguay and, later, Australia. The U.S. wraps up group play against Turkey on Thursday evening. Win, lose or draw, the U.S. has already won its group and will advance to the knockout round.

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INGLEWOOD, Calif. — For the U.S. men’s national soccer team, a loss in Thursday night’s FIFA World Cup game against Turkey wouldn’t change anything.

A win, though, would be history.

The squad’s earlier wins over Paraguay and Australia, plus two losses by Turkey to the same teams, mean the Americans have already won their group and clinched a favorable path in the knockout round, no matter the outcome of Thursday’s game.

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But the American men have never won more than two games in a single World Cup. A third win would be new territory for this team, which has not been shy about its aspirations in this tournament and its confidence about living up to them.

“The group stage is not done yet. We want to end it the right way. We want to end it the way we came into it and continue to build off of the momentum that we’ve been creating,” said defender Mark McKenzie, speaking to reporters Wednesday.

Because the outcome of the game does not affect knockout-round placement, the U.S. can rest key starters who will enter the match with a yellow card. For those players — defenders Antonee Robinson and Chris Richards, midfielder Tyler Adams and forward Folarin Balogun — picking up a second yellow card against Turkey would result in a suspension in the Round of 32. (Any single yellow cards will be cleared after the group stage concludes.)

The team could also choose to ease in forward Christian Pulisic, who is expected to be available for the game after sitting out the U.S.-Australia game with a minor calf injury.

Turkey had come into the World Cup with high expectations. With talented young stars like the 21-year-old attackers Arda Güler of Real Madrid and Kenan Yildiz of Juventus, the team was thought by many — from analysts to the players themselves — to be a dark horse capable of a deep run.

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