Core Event:
According to a report by Kyodo News on December 12, the Bank of Japan has begun final coordination and plans to decide on an interest rate hike at the monetary policy meeting scheduled for December 18 to 19. It is expected to raise the policy interest rate from the current 0.5% by 0.25 percentage points to around 0.75%. This will be the highest interest rate level since September 1995 and marks another rate hike by the Bank of Japan since January of this year.
The recent interest rate hike has been seen by the market as a 'done deal.' As early as December 1, Bank of Japan Governor Kazuo Ueda's speech had pushed market expectations to a peak. Since then, several authoritative media outlets, including Reuters, have cited sources saying that the possibility of an interest rate hike is very strong.
Why must action be taken at this moment?
The Bank of Japan's urgent shift this time is mainly due to triple pressures:
1. Countering the 'bad' depreciation of the yen and input inflation: Recently, the yen fell to 157.9 against the dollar, reaching a new 10-month low, raising the costs of food and energy imports. Governor Ueda Kazuo has clearly pointed out that the weakness of the yen is becoming the main reason for rising domestic prices.
2. Inflation consistently meeting targets: Japan's national core CPI has remained above the 2% target for more than three and a half years. Tokyo's core CPI also remains high. Price pressures have made the rationale for maintaining ultra-loose policies disappear.
3. Paving the way for policy normalization: Ueda Kazuo is expected to emphasize that even after the interest rate hike, Japan's real borrowing costs remain negative, and there is still a distance to the 'neutral interest rate.' This action aims to initiate a clear tightening cycle, and market analysis suggests that the Bank of Japan's ultimate goal may be to gradually raise rates to around 1.5% neutral level.
Global impact: The end of the cheap yen era opens the door for asset revaluation.
As the last major economy in the world to bid farewell to negative interest rates, Japan's policy shift will have repercussions far beyond its borders:
· A wave of unwinding carry trades: The classic carry trade model of 'borrowing cheap yen to invest in high-yield global assets,' which has lasted for decades, faces a reversal. This could trigger a chain sell-off from U.S. Treasuries to emerging market assets, draining global liquidity.
· The cryptocurrency market is under pressure: The tightening of global liquidity is certainly not favorable for risk assets. Historical experience shows that during times of dollar liquidity stress or major central banks tightening their policies, high-risk assets such as cryptocurrencies often bear the brunt, facing significant selling pressure. The interest rate hike in Japan will further reinforce this macro bearish backdrop.
· Divergence of East and West policies: This interest rate hike in Japan coincides with the Federal Reserve possibly starting a rate cut cycle, and this rare policy divergence will lead to dramatic reallocation of global capital, exacerbating the volatility of various assets.
Conclusion:
This is not just a simple 25 basis point interest rate hike in Japan, but a declaration of the fall of the 'last bastion of cheap global funds.' When this largest liquidity reservoir starts to tighten its valves, no one can remain unscathed. For the cryptocurrency market, a severe test driven by macro monetary policy may only just be beginning.
The above analysis is based on public reports and comments from Kyodo News, Reuters, Bloomberg, and several financial media outlets. The market carries risks; decisions should be made cautiously.#黄金 #日本加息