🏦 With stubborn inflation keeping food prices above 2% for almost four years, all eyes are on the Bank of Japan as it wraps up its two-day policy meeting tomorrow, Friday, December 19. Economists widely expect a jump in the short-term interest rate from 0.5% to 0.75%—the biggest hike in 30 years. 💹
Despite the push to rein in inflation, some voices urge caution. Masazumi Wakatabe, former deputy governor of the BOJ and current member of Japan’s top economic council, recently warned that moving too early could backfire.
“If Japan's neutral rate rises as a result, it would be natural for the BOJ to raise interest rates,” Wakatabe said at a panel.
On the business front, corporate leaders are also sounding alarms. Akihiro Kaneko, president of the Confederation of Japan Automobile Workers’ Unions, told the Japan Times that a sharp yen could dent corporate sentiment and make wage hikes tougher.
“If the yen sharply strengthened after Friday's decision, it could affect corporate sentiment,” he said. “Sharp moves would make it harder for exporters to offer wage increases as their expected profits would disappear,” he added, noting that moderate moves would be manageable.
The expected rate increase marks a key step in the BOJ’s fight against persistent inflation. It also highlights a split between policymakers who favor caution and those preparing for further tightening.
Markets around Asia and beyond will watch Friday's decision closely for signals on how far and how fast the BOJ plans to move next year. For young investors, entrepreneurs, and students, this is a script in the making—one that could shape borrowing costs, exchange rates, and corporate strategies in the months ahead. 🔍📈
Reference(s):
cgtn.com
