Bank of Japan hikes interest rate to 17-year high

The falling JPY due to very low interest rates has pushed real wages down. As a result, consumption has been declining. Consumption represents 55% of GDP and investment 26%. So, all in all, increasing interest rates to prevent the JPY from weakening further is probably positive for the economy as a whole.

I hope this change helps the Japanese economy. I The Japanese people deserve a break from economic stress.

kurisupisuToday  09:09 pm JST

The interest rates are still very low in Japan-it’s a wonder that there is any yen in the country!

i have just placed asu stantial amount of my money in a one year foreign currency bond at 4%.

No returns similar in Japan except for expert stock pickers

Without doing any stock picking you could just by the Nikkei 225 index through an ETF. It returned an annualized 7.5% over the past 10 years and 11% over the past 5 years.

So inflation hits 3.0 - 3.6% now, and the Japanese policy rate is now 0,5%

With the US currency, inflation is a little less but sticky, and the policy rate is above 4%.

US stock indexes hitting all time highs. Gold at virtually all time highs.

The yen still looks like a total dog. It’s probably new lows for the yen in weeks ahead, in my estimation. Hope to be wrong about this

kurisupisuJan. 24  09:09 pm JST

The interest rates are still very low in Japan-it’s a wonder that there is any yen in the country!

i have just placed asu stantial amount of my money in a one year foreign currency bond at 4%

And still you lose money all the time due to inflation. People think higher interest rates help, it just means you lose less due to inflation but still you lose.

Hopefully this will finally bankrupt all the zombie companies in Japan.

It’s called stagflation. And they created it.

> > Without doing any stock picking you could just by the Nikkei 225 index through an ETF. It returned an annualized 7.5% over the past 10 years and 11% over the past 5 years.

.

Stock returns are never guaranteed-the bond rate is guaranteed and low risk.

And still you lose money all the time due to inflation. People think higher interest rates help, it just means you lose less due to inflation but still you lose.

As opposed to what?

Keeping cash? Gold? Stocks?

Of course, I have different investments but none of those allow a guaranteed return and thus an untroubled sleep.

Share your knowledge on how it is possible to beat inflation.

to 0.5 percent won't cool the economy

Really? If a small or mid-sized company wants to make an investment, let's say buying or replacing a machine, and needs to go to a bank for loan financing that, then such an interest rate rise is quickly adding up to enormous additional amounts. What happens then, let's say in half of the cases? The investment is denied or postponed and hinders the further business development, and also the producer of the machine doesn't get an order. I can assure you, that will definitely cool the economy significantly!

Real interest rates are MINUS three, after December’s CPI of 3.6%. Not what the textbook would call tight

So inflation hits 3.0 - 3.6% now, and the Japanese policy rate is now 0,5%

Because most of that is cost--push inflation, which is not the kind the BOJ wants to see. Its rate policy is linked instead to a cycle wherein wages and demand-led inflation create an upward "virtuous cycle."

I'm not going to say that understanding this concept is "economics 101" but rather 201.

The falling JPY has more than offset the rise in interest rates, so the net effect is a monetary easing. Given the country’s loose fiscal policy as well, I shouldn’t feel too worried for companies

The interest rates are still very low in Japan-it’s a wonder that there is any yen in the country!

i have just placed asu stantial amount of my money in a one year foreign currency bond at 4%.

No returns similar in Japan except for expert stock pickers