Japan’s Economic Shift: Central Bank Hikes Rates to Highest Level in Nearly Two Decades
The Bank of Japan (BOJ) has raised its short-term policy rate to "around 0.5 per cent", marking the highest borrowing cost in 17 years. This decision follows December's accelerated consumer price increases and signals a strategic economic adjustment. Official figures reveal core consumer prices in Japan rose 3% in December compared to the previous year. The rate hike, carefully communicated by BOJ Governor Kazuo Ueda, aims to minimize market disruption after the July increase that previously surprised global investors. Economists like Neil Newman from Astris Advisory Japan and Stefan Angrick from Moody's Analytics anticipate continued rate increases. Newman notes that rising wages, persistent inflation above 2%, and economic growth support further rate adjustments. Angrick expects another 25-basis point hike in six months. This move represents a significant departure from Japan's long-standing ultra-low interest rate policy. Last year's initial rate increase […]
