BOJ chief points to hiking interest rates if inflation keeps rising

That man in the photo is a hero!

it has vowed to continue buying long-term bonds to prevent a sudden spike in yields that will hurt the economy.

It will blow up the government’s finances :)

the BOJ will "take time to consider and determine at what timing and what speed we will be reducing the amount of JGB (Japanese government bond) purchases."

That’s the tough part.

Market forces should determine long term rates, but you have a spendthrift government with a quadrillion of public debt running 10s of trillions of yen in extra deficits each year.

For mine the long term interest rate could be something like 20%.

Wow!

The mighty BOJ will hike interest rates by .1 %

so rates will be .9% or 1%?

Even those numbers are likely impossible.

Why should I even bother with the yen if I can easily get fixed rates of dollars, euros and pounds paying at least 5%

If I want more risky (higher percentages) foreign exchange then there are even higher rates.

American are generally getting 4.5 percent on their money guarantees return,

Just an idea, but how about you just stop printing money? Abenomics was a failed policy that kishida is just blindly trying to copy..

@Moskolo

Just an idea, but how about you just stop printing money? Abenomics was a failed policy that kishida is just blindly trying to copy..

Indeed. The problem is that Abenomics is hard to unwind quickly. Too much damage has been done .Ueda san tries his best but it is nearly mission impossible. Good luck Ueda san!

Bank of Japan chief Kazuo Ueda said Friday the central bank will "very likely" raise interest rates if underlying inflation continues to increase, stressing future decisions will be data dependent.

Is underlying inflation continuing to increase? Note that this will be a magically calculated government number and not the price of anything in a shop.

Generally speaking, the forces driving the current inflation, Covid and the Ukraine war disruptions, are weakening, not strengthening. Inflation is the West, which spiked higher than Japan, is now decreasing not increasing.

A HERO??

How is that??

Despite the "present" exchange rate, many investors continue to hold JYen. Or rarther they are buying it up at these exchange rates.

The return on holding JYen is indeed ridiculous, but they are drawn to the long term stability of that currency. Whch often comprises only a portion of their currency holdings. This is especially true in light of current global events.

If you're not in that game, the only reason to hold JYen is if you have JYen expenses and liabilities.

Your dollars growning at 4.5 percent every month in a bank out does the yen, American are a fee for foreign transactions,even if the foreign currency is worthless,you lose money in the transaction a million dollar weight a 100 pound in. Hundreds

kurisupisuToday  06:13 pm JST

Wow!

The mighty BOJ will hike interest rates by .1 %

so rates will be .9% or 1%?

Even those numbers are likely impossible.

Why should I even bother with the yen if I can easily get fixed rates of dollars, euros and pounds paying at least 5%

If I want more risky (higher percentages) foreign exchange then there are even higher rates.

It depends on the situation of each individual. There have been cases in the past when the JPY appreciated by 10% against the USD within a single day. This would annihilate two years of return on a USD deposit. Some people living in Japan with large upcoming expenses, such as their children’s education or down payments for real estate purchases in the near future, have no choice but to hold cash in JPY.

But how high can rates go if government debt is more than 250% of GDP? At Western interest rates all J-Gov's tax income would go to interest payments.

it’s only money.

and you can’t have it.

it’s a game. raise interest rates and banks, cc companies make more money on your debt. inflation continues because everybody raises prices because debt cost is higher.

lower interest rates and it doesn’t increase inflation. see japan for the last 30 years.

as long as income is stagnant and cost of living rises, real income is less and the suits are happy. your purpose in life is to keep bankers happy.

@Peter Neil spot on!!

Private sector employers. This is the one group responsible for the problems you speak of.

They are raking the highest profits in their history. Yet for the past decade or so, they have refused to raise wages in line with their earnings growth. That means workers real wages fall or stagnant. So they don't spend, curbing economic growth, as more than 60% of Japan's GDP comes from private consumption.

That prompts the BOJ to keep int. rates really low, weakening the yen's strength and making people's grocery and energy bills all the more expensive. Why do people not blame the culprits? I can only attribute that to the power of propaganda.

they have refused to raise wages in line with their earnings growth

wages are supposed to be set by supply and demand for labour, not by earnings growth.

if a recession comes and there are negative earnings, are employers then supposed to cut wages too?

wages are supposed to be set by supply and demand for labour

Except they aren't. Why do you think that corporations cry about a severe labor shortage yet actively suppress real wages? There's about a million things, mostly set by employers, that warp supply and demand in the labor market .