What are the effects of Japan's interest rate hike?

Historical comparison reference: In 2024, the Bank of Japan's first interest rate hike triggered a single-day plunge of 12% in the Nikkei index, and the current market liquidity environment is more fragile.‌‌

Future interest rate hike rhythm:

Adopting a "constructive ambiguity" strategy to avoid giving a clear end point for interest rate hikes.‌‌

Former central bank official Ayako Fujita pointed out that 1% may serve as the lower limit for the neutral interest rate, with the actual level possibly implied to be higher.‌‌

Policy contradiction controversy:

The Japanese government concurrently launched a 21 trillion yen economic stimulus plan, which forms a policy hedge against interest rate hikes.‌‌

Concerns about debt risk: The government debt ratio has reached 229.6%, and aggressive interest rate hikes may exacerbate doubts about fiscal sustainability.