Categories: Economy

Japan is rowing against the tide and raising interest rates

Unlike many other central banks, the Bank of Japan will not raise interest rates. Instead, the interest is left intact. According to the central bank, this will stimulate the economy.

The Bank of Japan has decided to raise the maximum yield on Japanese government bonds from 0.25 to 0.50%. It was also decided to keep the short-term interest rate at minus 0.1%. All this to bring inflation down to 2 percent, but the expectation is that inflation will end up at 3 percent.

Haruhiko Kuroda of the Bank of Japan. Unlike many other central banks, the Bank of Japan will not raise interest rates. (ANP/EPA)

According to Japanese observer Radboud Molijn, inflation in the country is currently quite low following a long period of deflation. “Japan’s government debt is also gigantic and if interest rates were to be raised, more interest would have to be paid on that debt as well.”

The Japanese economy often goes against the grain, says Molijn. ‘Nobel prize winner Kuznets already said in the 1970s that there are four types of economies: you have developed economies, you have underdeveloped economies, you have Argentina and you have Japan. Sometimes it seems that Japan evades the laws of economic gravity.

Asia

Equity markets in Asia painted a mixed picture today. Tokyo’s Nikkei was a positive outlier, finishing up 2.5% on the Bank of Japan’s decision.

Author: John Luke
Source: BNR

Andrew

Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.