The Bank of Japan marks a landmark shift away from its massive monetary stimulus.

The central bank has decided to end its negative interest rate policy and raise borrowing rates for the first hike in 17 years.

It will also abandon its yield-curve control framework, which holds down long-term interest rates as well as short-term rates.

The policymakers announced the move after winding up their two-day meeting on Tuesday.

They have decided to end the bank's negative rate policy. The BOJ now sets the overnight call rate as its new policy target.

Policymakers say they will encourage the overnight call rate to remain at around zero percent.

The central bank's interest rate hike is the first since February 2007.

The BOJ has kept the short-term interest rate at minus 0.1 percent for some deposits by financial institutions held by the central bank since 2016.

At the same time, the bank will no longer set a target for 10-year government bond yields, meaning it will now tolerate higher long-term rates.

Under its yield curve control, the bank bought large quantities of Japanese government bonds to keep long-term interest rates at around zero percent.