What's up with the Bank of Japan's unique track?
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Loading... - Bagaskoro Irawan
- 27 Oct 2022
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Even as the Federal Reserve and the world’s other central banks raise interest rates to try to curb inflation, the Bank of Japan has stood firm.
Since 2016, Japan's key interest rate has been minus 0.1%. The world’s third-largest economy has been battling deflation, or a continuous downward spiraling of prices, for years. So, at a time when surging prices prevail in much of the world, Japan also is facing inflationary pressures, but on a much more modest scale.
Low interest rates are designed to make borrowing cheaper, encouraging investment and spending. Your hard-earned money in the bank won’t be earning much interest.
The big question is: What will the Bank of Japan, which is holding a policy meeting Thursday and Friday, do next?
WHAT ARE OTHER CENTRAL BANKS DOING?
The Fed has embarked on aggressive monetary tightening to rein in inflation that is at multi-decade highs. Last month, the U.S. central bank raised its benchmark short-term rate for the third straight time to a range of 3 percent to 3.25 percent, its highest level since early 2008.
The rate started the year basically at zero, after central banks worldwide slashed interest rates and carried out other measures to counter the economic impact of the pandemic.
Some analysts expect the Fed to raise its overnight rate by three-quarters of a percentage point next month, the fourth such increase. That’s triple the usual amount and would bring the rate up to a range of 3.75% to 4%. Read More...
