Japan's central bank, the Bank of Japan (BOJ), is wrapping up its two-day policy huddle this Friday (Dec 19) – and word on the street is a rate bump from 0.5% to 0.75% is coming. That's the biggest jump in 30 years! 💥
Why now? One big reason: food prices have stayed sky-high for nearly four years, putting inflation above the BOJ’s 2% goal. Higher interest rates help slow down spending and cool inflation by making loans pricier – from business investments to your friend’s start-up fund. 📉
Not everyone’s cheering though. Masazumi Wakatabe, former BOJ Deputy Governor and current economic council member, warns that raising rates too soon could backfire. “If Japan's neutral rate rises, it would be natural for the BOJ to raise interest rates,” he said – hinting that timing is everything. ⏰
Corporate Japan is also on edge. Akihiro Kaneko, head of the auto industry union, points out a stronger yen after the rate hike could squeeze export profits. And when profits shrink, wage hikes might stall – a deal-breaker for workers expecting pay bumps in the next fiscal year. 🚗💨
So what's next? Markets are glued to Friday's decision for clues on how far and fast the BOJ plans to go. Will they hike again in early 2026, or ease off? Either way, expect ripples across markets – from Japanese stocks to startup funding in Southeast Asia. 🌏📈
Stay tuned and grab your favourite matcha latte – this is one policy move you won't want to miss! 🍵😉
Reference(s):
cgtn.com
