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The Bank of Japan hits the pause button on interest rate hikes! A life-and-death game under the global trade storm + weak domestic demand:
On March 19, the Bank of Japan maintained the benchmark interest rate at 0.5%, marking the first policy pause after ending negative interest rates! The core contradiction: Trump's tariff threat (dragging Japan's GDP growth down by 0.5%) vs. persistent high inflation (CPI has been above 2% for 34 consecutive months).
Banking industry boom (Mitsui Sumitomo earns 90 billion yen annually) vs. harsh winter for the real economy (the bankruptcy rate of small and medium-sized enterprises hits a ten-year high), and the soaring government bond yield of 1.5% triggers a fiscal deficit crisis. The market bets on a rate hike to 0.75% in July, but the US-Japan interest rate differential, yen exchange rate (in the range of 146-151), and the reversal of a $4 billion arbitrage trade become the biggest variables! Global central banks are closely watching Japan's 'policy shift experiment' - is this a milestone in economic recovery or a fuse for a new round of crisis?
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