🗣Bank of Japan has officially closed the era of cheap money. The regulator raised the key rate to 0.75% - the maximum level since 1995, finally walking away from decades of ultra-soft policy.
The decision was made unanimously. The head of BOJ, Kazuo Ueda, made it clear that the rate hike would continue if the economy and inflation were in line with the forecasts. Now inflation in Japan has been above the target 2% for almost four years, in November the price increase was 3%.
The markets reacted ambiguously:
- the yen weakened to 156.8 per dollar, as investors were waiting for tougher signals;
- the yield of 10-year government bonds exceeded 2% - the maximum since 1999;
— the Nikkei 225 index closed by 1% growth.
The Bank of Japan believes that the "neutral rate" is in the range of 1-2.5%, which means that there is room for further increases. Against the background of the fact that the US Federal Reserve is already lowering rates, Japan is going against the global trend, gradually reducing the yield gap and trying to contain inflation and weakening of the yen.
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