#日本加息
Bank of Japan raises interest rates by 25 basis points, reaching a 30-year high # Bank of Japan raises interest rates by 25 basis points: The policy shift and deeper background behind the 30-year high
On December 19, the Bank of Japan announced as scheduled a 25 basis point interest rate hike, raising the policy rate from 0.5% to 0.75%, marking the highest level in 30 years since 1995, signifying the accelerated process of Japan bidding farewell to nearly 30 years of ultra-loose monetary policy.
The core background of this rate hike is the persistently high inflation pressure: Japan's core CPI has been above the policy target of 2% for 44 consecutive months, with a year-on-year increase of 3% in November, and the long-term weakness of the yen has led to input inflation continuously eroding household purchasing power. This is also the third rate hike since Governor Ueda Kazuo took charge of the central bank, and Japan is steadily advancing the normalization of monetary policy after ending the negative interest rate policy in March 2024.
However, the rate hike decision faces multiple contradictions: on one hand, Japan's real GDP shrank by 0.6% quarter-on-quarter in the third quarter, with an annualized decline of 2.3%, nearing a technical recession, and the rate hike could suppress consumption and investment; on the other hand, the government is simultaneously promoting a fiscal stimulus plan of 18.3 trillion yen, forming a policy mismatch of 'tight monetary + loose fiscal,' which could weaken the effect of inflation control and raise debt costs.
Market reactions show divergence: the yen's exchange rate against the dollar fell instead of rising, reaching the 157 level, the 10-year government bond yield rose to the highest level since 2006, and the Nikkei 225 index rose by 1%, reflecting that the expectations of a rate hike have been largely priced in. The Bank of Japan stated that if the economy and prices meet expectations, it will continue to raise rates in the future, with the market widely predicting that rates may rise to over 1% by 2026.
