After a two-day meeting, the Bank of Japan raised its benchmark interest rate by 0.25 percentage points from 0.5% to 0.75% per annum, as expected.
After raising it to 0.5% last january, it was raised again less than a year later.
Accordingly, Japan’s base interest rate reached its highest level in 30 years since 1995.
As was to be expected, price pressure was the biggest reason.
In particular,it was important to note that the consumer price inflation rate continues to exceed 2% and that wage increases are expected to be large next year.
The Bank of Japan raised the interest rate to 0.1% per annum in March of last year, leaving the interest rate at negative rates for the first time in 17 years, and then gradually raised it to 0.25% and 0.5% in July of last year and January of this year, respectively.
As Japan raises interest rates further, attention is focused on the impact it will have on the global financial market.
In particular, there is considerable speculation that the so-called ‘yen carry trade’ practice of borrowing japanese yen at low interest rates and investing in overseas assets will be hit hard.
There are also predictions that cryptocurrency prices will fluctuate significantly instantly.
When Japan raised interest rates to 0.25% in July of last year, the global financial market plunged in shock.
Though, some say that this time, most of it has already been reflected in the market, and the financial market situation is different from last year, so the impact will not be significant.
This is YTN Kim Seon-joong.
Video Editingã…£Hyuncheol Lim
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