Main Takeaways:-
- The Bank of Japan may cut the interest rate today or tomorrow due to increasing inflation and Worldwide instability.
- U.S. President Donald Trump’s new tariffs are postponing upcoming rate increases till a minimum of January 2026.
- Japan is reducing bond buying and strongly attracting international investors to fill a $10B capital gap.
The Bank of Japan might lower interest rates very soon, maybe today or tomorrow, because of pressure within the country and growing problems around the world. In the past three months, the projected inflation went up again in Japan, according to a BOJ report shared Friday, with 86.7% of residential groups currently assuming that the price will increase over the next 12 months.
According to the reports, this is the most significant number since June 2024, and it is larger than the 85.7% rate from December. One reason the central bank was planning to raise interest rates, not lower them, was because of these assumptions. But at present, that plan is on hold for the moment.
A similar report displays that companies in Japan are officially beginning to increase salaries and product prices, which the BOJ had been eagerly awaiting for years. The data clearly displays the signs of more interest rate increases beginning to show up.
Trump’s Tariffs Slow BOJ Interest Rate Increases as Japan Faces Rising Inflation
But experts say an additional reason is currently standing in the way: Mr President Donald Trump, who is back in the White House, started a new set of taxes on imports, and that has brought back fears of a worldwide economic slowdown.
That worry is a major reason why the Bank of Japan is now anticipating lower interest rates instead of raising them again, a move which, as you might remember, caused all markets to crash on August 5th, 2024.
At present, stocks and crypto have all declined due to Trump’s actions. Bitcoin is continuing to fight to get back to $100,000, and the S&P 500 continues to increase and destroy trillions in a few minutes nearly every trading day. Interestingly, the stock market had a big comeback on Wednesday, it was the second-best day ever in the past.
At the same time, gold was breaking all records during the fall, but even the stock market became a little shaky after Trump put 125% taxes on Chinese goods, the highest ever in history.
Naomi Muguruma, the top bond expert at Mitsubishi UFJ Morgan Stanley Securities, said that she is now delaying her assumption for the next Bank of Japan rate increase by six months, moving it to January 2026.
International Investors Step In as BOJ Reduces Bond Buys
The Bank of Japan has been slowly ending its money-boosting policy since Kazuo Ueda took over from Haruhiko Kuroda. Ueda increased interest rates for the first time in 17 years and said the central bank will begin cutting back on the bonds it owns.
Bond yields have hit benchmarks that have remained unseen since the 2008 market collapse, and that is gaining renewed attention. If the Bank of Japan lowers interest rates soon, it will likely cause prices of stocks, bonds, cryptocurrencies, and gold to go up, giving investors some essential support.
Read also:- Gold at $3,200 Amid U.S.-China Tensions, Could Bitcoin Be Next?
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