Interest.co.nz on Nostr: Yen plunges to 34-year low despite interest rate hike as BoJ creates credit faster ...
Yen plunges to 34-year low despite interest rate hike as BoJ creates credit faster than Fed
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The Bank of Japan (BoJ) raised interest rates for the first time in 17 years on March 19, bringing an era of negative interest rates to an end. The key rate was hiked from –0.1% to a band from zero to 0.1%. However, the move is not designed to end Japan’s monetary policy dilemma; instead, it confirms the central bank’s role in supporting the US dollar. Negative rates were never a stimulus to the economy but served as a tax on the reserves held by commercial banks at the central bank. Lowering rates into negative territory actually raised borrowing rates for loan customers. The years of zero and negative rates have forced thousands of small banks in Japan to merge with bigger banks, harming the Japanese economy by limiting bank credit growth. The yen has weakened further since the recent policy announcement, and the BoJ continues to expand credit creation faster than the US Federal Reserve, propping up the US dollar.
#BankOfJapan #InterestRates #Yen #UsDollar #MonetaryPolicy
https://www.interest.co.nz/economy/127371/richard-werner-argues-bank-japan-cutting-interest-rates-first-time-17-years-was-move
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The Bank of Japan (BoJ) raised interest rates for the first time in 17 years on March 19, bringing an era of negative interest rates to an end. The key rate was hiked from –0.1% to a band from zero to 0.1%. However, the move is not designed to end Japan’s monetary policy dilemma; instead, it confirms the central bank’s role in supporting the US dollar. Negative rates were never a stimulus to the economy but served as a tax on the reserves held by commercial banks at the central bank. Lowering rates into negative territory actually raised borrowing rates for loan customers. The years of zero and negative rates have forced thousands of small banks in Japan to merge with bigger banks, harming the Japanese economy by limiting bank credit growth. The yen has weakened further since the recent policy announcement, and the BoJ continues to expand credit creation faster than the US Federal Reserve, propping up the US dollar.
#BankOfJapan #InterestRates #Yen #UsDollar #MonetaryPolicy
https://www.interest.co.nz/economy/127371/richard-werner-argues-bank-japan-cutting-interest-rates-first-time-17-years-was-move