$ETH The Bank of Japan's interest rate hike on December 19 is basically a done deal, raising rates from 0.5% to 0.75% (the highest in thirty years). The core of the 'greater action' is to dispel market speculation about a 'stop in rate hikes'. Future rate increases will be pushed continuously based on economic responses, and this isn't just a one-time hike. 😣
Here's a breakdown that's easy to understand and remember:
1. The rate hike is a foregone conclusion with a clear magnitude: the market has long priced in a 25 basis point rate hike, and the focus is no longer on 'whether to hike' but 'how much more will be added later'. After this rate hike, the interest rate will approach the lower limit of the Bank of Japan's neutral rate range (1.0%-2.5%), leaving room for further increases.
2. The core of the 'greater action': signaling ongoing rate hikes: The Bank of Japan will not disclose specific neutral rate values but will emphasize 'the actual borrowing cost remains negative' after the meeting, proving the rationality of continued rate hikes and shattering the illusion that 'after this hike, it will stop'. In simple terms, it means clearly telling the market: As long as the economy can withstand it, rate hikes will not stop.
3. Impact on the market: Be wary of tightening liquidity, but don’t panic: The yen has long been a low-cost borrowing currency globally, with many borrowing yen to invest in stocks and cryptocurrencies (also known as 'carry trade'). Rate hikes will cause borrowing costs to soar, forcing everyone to close positions and withdraw investments, which may lead to increased volatility in global assets (especially stock markets and cryptocurrencies), potentially even repeating last year's 'Black Friday' downturn. However, the expectation of this rate hike has long been released, and the risks have gradually been priced in by the market, so there’s no need for excessive panic. ~
4. The hedging against the Fed's rate cuts: Policy divergence increases volatility: The Fed just made a 'hawkish rate cut' on the 10th, while Japan is hiking rates in the opposite direction. Major central banks globally are now 'fighting their own battles', and this divergence will make capital flows more chaotic, causing increased short-term volatility in both the stock market and cryptocurrencies. It’s essential for your husband to manage risks well in investments. ❤️#美联储降息
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