Reports that the Bank of Japan is exploring an additional rate hike in September or October split opinion on a 5ch thread over the appropriate interest rate level and its side effects. Some called for rates as high as Turkey’s, while the discussion also spread to the impact on people with variable-rate mortgages, Governor Ueda’s remaining term, and the funding problem facing the Takaichi administration.
The Bank of Japan is considering accelerating the pace of its rate hikes. It has raised the policy rate roughly once every six months, but is now exploring an additional hike in September or October without much gap since the previous hike in June. If the BOJ falls behind on tackling inflation, pressure for renewed yen depreciation and rising rates could intensify again, so markets are closely watching a string of remarks from BOJ officials starting this week.
Raising rates faster than “once every six months”
“If we don’t accelerate the pace of rate hikes, prices will overshoot and it will be a major drag on the economy,” “Shortening the six-month interval…” (continues in the paid version, 1,731 characters remaining)
Source: nikkei.com / Original article here
Japan, a developing country these days, would actually hit the right balance by raising rates to Turkish levels.
>>4
You don't even need to go as high as Turkey — just hiking to 3-4% would trigger a yen-carry-trade unwind, send the yen sharply higher, and wreck the global economy.
You don't even need to go as high as Turkey — just hiking to 3-4% would trigger a yen-carry-trade unwind, send the yen sharply higher, and wreck the global economy.
>>4
Not a "developing" country — a "declining" one. There's nowhere left to go but down.
Not a "developing" country — a "declining" one. There's nowhere left to go but down.
Before raising rates,
they need to bring in progressive taxation on interest income —
otherwise we'll get a massive surge of rich people living off interest income without ever working.
Hurry up and introduce progressive interest taxation.
they need to bring in progressive taxation on interest income —
otherwise we'll get a massive surge of rich people living off interest income without ever working.
Hurry up and introduce progressive interest taxation.
>>5
The people earning that interest either worked hard or saved hard — it's one of the two, lol.
Why is it a problem if there's a gap?
The people earning that interest either worked hard or saved hard — it's one of the two, lol.
Why is it a problem if there's a gap?
Hurry up and raise rates already
and send everyone with a variable-rate mortgage straight to hell.
and send everyone with a variable-rate mortgage straight to hell.
>>9
Then let's revise the Land and House Lease Law too, and jack up rent freely as well, lol
Then let's revise the Land and House Lease Law too, and jack up rent freely as well, lol
>>9
That's pretty short-sighted, lol
That's pretty short-sighted, lol
If rate hikes alone were enough to keep a currency stable, the Turkish lira wouldn't exist.
The Strait of Hormuz and the Red Sea look shaky,
plus a big fight with China —
here comes the "Takaichi risk."
The Strait of Hormuz and the Red Sea look shaky,
plus a big fight with China —
here comes the "Takaichi risk."
>>65
They need to cut ties with China ASAP
or we'll just get dragged into it.
There's less than a month of grace period left,
and yet everyone's still acting so laid-back about it.
They need to cut ties with China ASAP
or we'll just get dragged into it.
There's less than a month of grace period left,
and yet everyone's still acting so laid-back about it.
Worthless NEET investors just don't want stock prices to fall.
Ordinary people rent — these days the only ones taking out mortgages
are geezers in their late 50s.
Anyone younger than the Ice Age generation isn't taking out mortgages,
because they have no income.
The only people a rate hike actually hurts are worthless NEET investors watching their stocks drop and geezers in their late 50s.
Ordinary people rent — these days the only ones taking out mortgages
are geezers in their late 50s.
Anyone younger than the Ice Age generation isn't taking out mortgages,
because they have no income.
The only people a rate hike actually hurts are worthless NEET investors watching their stocks drop and geezers in their late 50s.
>>68
No idea where you're getting your sample from, but that's pretty unusual.
Even I — smack in the middle of the Ice Age generation, class of '99 — was able to freely take out a mortgage, variable or fixed, over ten years ago.
No idea where you're getting your sample from, but that's pretty unusual.
Even I — smack in the middle of the Ice Age generation, class of '99 — was able to freely take out a mortgage, variable or fixed, over ten years ago.
Ueda's got about a year and a half left in his term.
He probably just wants to run out the clock and dump this on his successor.
He probably just wants to run out the clock and dump this on his successor.
>>74
Ueda won't be able to run from it. Next year things are going to get rough worldwide.
Ueda won't be able to run from it. Next year things are going to get rough worldwide.
Hurry up and raise rates, and show us just how weak the yen becomes once there's no interest rate gap left.
>>75
Well, I think they'll probably have to cut rates again soon anyway, but for now, the global average inflation rate is apparently around 3%, so they need to get rates to at least 3%.
Well, I think they'll probably have to cut rates again soon anyway, but for now, the global average inflation rate is apparently around 3%, so they need to get rates to at least 3%.
With US nominal GDP growth around 6%,
the Treasury yield sits at 4.25%.
For the BOJ to aim for 4.25%,
Japan's nominal growth would need to climb into the 6% range too.
At that level of nominal growth, the yen would almost certainly be trading in the 180s,
but since US rates move with the US economy, and the exchange rate moves with them,
it ultimately all comes down to US nominal growth.
the Treasury yield sits at 4.25%.
For the BOJ to aim for 4.25%,
Japan's nominal growth would need to climb into the 6% range too.
At that level of nominal growth, the yen would almost certainly be trading in the 180s,
but since US rates move with the US economy, and the exchange rate moves with them,
it ultimately all comes down to US nominal growth.
If they actually raise rates, mortgage holders will go bankrupt and companies will go under too.
>>101
We can't keep protecting even the wealthy who can afford a home loan at today's super-inflated prices.
And any tiny business that collapses just from the policy rate going back to around 2% wasn't needed anyway.
Once the number of businesses consolidates to a certain scale, the labor shortage eases too.
We can't keep protecting even the wealthy who can afford a home loan at today's super-inflated prices.
And any tiny business that collapses just from the policy rate going back to around 2% wasn't needed anyway.
Once the number of businesses consolidates to a certain scale, the labor shortage eases too.
>>101
Manufacturing jobs will shrink?
Manufacturing jobs will shrink?
>>101
Can't be bothered looking out for people with that naive a mindset.
Can't be bothered looking out for people with that naive a mindset.
Well, but looking at the current inflation rate alone, it's not really high enough to justify a hike, so it's a tricky call.
Actually, what side effects come from keeping just the policy rate low, given that mortgages are tied to it?
Mainly that it risks accelerating inflation through that channel? And also causing an overall overweighting toward housing investment?
Actually, what side effects come from keeping just the policy rate low, given that mortgages are tied to it?
Mainly that it risks accelerating inflation through that channel? And also causing an overall overweighting toward housing investment?
>>110
They're keeping rates low precisely because they're fine with inflation running higher, so that's not really a "side effect."
They're keeping rates low precisely because they're fine with inflation running higher, so that's not really a "side effect."
>>110
Bessent is half-furious and pressuring the BOJ, so they have no choice but to hike.
The BOJ couldn't care less
about people with variable-rate mortgages.
Bessent is half-furious and pressuring the BOJ, so they have no choice but to hike.
The BOJ couldn't care less
about people with variable-rate mortgages.
This is a textbook example of what happens when you keep rates low during normal times, even though you need room to cut them to avert and deal with a crisis when something actually happens.
>>139
But if that ends up causing a recession on its own, that's putting the cart before the horse…
But if that ends up causing a recession on its own, that's putting the cart before the horse…
>>139
During COVID, Japan was the only one already stuck at negative rates, couldn't deploy any economic policy, and ended up the sole loser.
During COVID, Japan was the only one already stuck at negative rates, couldn't deploy any economic policy, and ended up the sole loser.
Hike 0.75 points, then cut 0.25 in October.
Show everyone at home and abroad that the overly cautious BOJ can actually act.
On the currency front too, if the BOJ shows the guts to take the initiative, the trend could shift away from one-sided yen selling.
Show everyone at home and abroad that the overly cautious BOJ can actually act.
On the currency front too, if the BOJ shows the guts to take the initiative, the trend could shift away from one-sided yen selling.
>>143
Right, this is exactly the moment that kind of move is needed.
The question is whether Ueda, a timid academic, can actually make that call.
The market has already seen through the pattern of dragging out 0.25-point increments over a long time,
so Japan needs to show real resolve.
Right, this is exactly the moment that kind of move is needed.
The question is whether Ueda, a timid academic, can actually make that call.
The market has already seen through the pattern of dragging out 0.25-point increments over a long time,
so Japan needs to show real resolve.
>>169
If they do what >>143 says and it triggers a chain of bankruptcies piling up bad, non-performing loans, there's no undoing that.
If they do what >>143 says and it triggers a chain of bankruptcies piling up bad, non-performing loans, there's no undoing that.
Just keep selling US Treasuries and it'll sort itself out. Are you an idiot?
>>164
Understand that's not something you can do from the position of a colony.
And on top of that, the person running the other side is no ordinary man.
Understand that's not something you can do from the position of a colony.
And on top of that, the person running the other side is no ordinary man.
America is the reason we've got worldwide inflation in the first place — why isn't anyone angry at America?
>>166
Asia especially is in bad shape —
oil costs there run higher than the market rate.
Asia especially is in bad shape —
oil costs there run higher than the market rate.
The Takaichi administration needs 10 trillion yen to fund aggressive fiscal spending plus a consumption tax cut — what are they going to do?
If it's financed with deficit bonds, that'll only accelerate the yen's decline further.
If it's financed with deficit bonds, that'll only accelerate the yen's decline further.
>>200
That's why taxing interest income works fine.
It would bring in a staggering amount of tax revenue.
Interest income is unearned income to begin with,
so no matter how much you tax it,
it won't reduce anyone's motivation to work.
That's why taxing interest income works fine.
It would bring in a staggering amount of tax revenue.
Interest income is unearned income to begin with,
so no matter how much you tax it,
it won't reduce anyone's motivation to work.
>>200
There's no such theory.
There's no such theory.
*This article is excerpted and summarized from the 5ch (Breaking News+) thread “[BOJ] Weighs Faster Rate Hikes as Markets Eye 2%: The Heavy Burden of Averting a Yen and Rate Shock.”
Leave a Reply