TOKYO — Japan's audacious five-year experiment of force-feeding cash into an ailing economy began to wind down Thursday, chased into history by central bankers convinced that Japanese industry and consumers have risen from their sickbed and no longer need easy credit.
Japan's central bank governors emerged from a two-day meeting to declare that the era of "quantitative easing" -- jargon for regularly flooding Japan's banks with trillions of yen -- is over. It does not mark the end of interest-free money in Japan. But most observers see it as the beginning of the end.
The move was not unexpected, though it came a bit earlier than some economists anticipated and much earlier than nervous Japanese politicians wanted.
But the bank's governors made clear that while they believed that the days of deflation -- falling prices for goods and services -- were over, they would continue to hold short-term interest rates near zero, at least for the next several months.
There had been fears that a sudden boost in the central bank's key rate, from the current 0.001%, would choke off what by most measures appears to be an expanding Japanese economy.
That prospect revived bad memories of the Bank of Japan's infamous misstep in 2000, when it greeted signals of modest growth with a rate hike that plunged the world's second-largest economy back into recession.
Some economists also worry that higher rates could have global repercussions by encouraging Japanese investors to repatriate some of their vast U.S. investment holdings. That could force the Federal Reserve to push up rates more steeply than they are already climbing, leading to higher U.S. mortgage costs and depressed housing prices.
But analysts in Tokyo said Thursday that the Bank of Japan's first step toward returning to an orthodox monetary policy should have little effect on U.S. rates, at least in the short term.
"This is a fairly benign event globally," said Paul Sheard, chief economist in Asia for brokerage Lehman Bros.
Reaction may be muted in part because anticipation of Japan's shift has already helped to push up global bond yields in recent weeks. The yield on Japan's 10-year government bond, 1.61% on Thursday, has jumped from 1.44% in mid-January.
The Nikkei 225 stock index rose 2.6% to 16,036.91 on Thursday, but is off 0.5% year to date.
