One year on from Japan’s historic rate hike, profits at its biggest banks are soaring to records, while price rises are forcing consumers to cut back and higher borrowing costs are fueling a political battle over how the government can rein in its outlays.
Bank of Japan Gov. Kazuo Ueda scrapped the world’s last negative interest rate and its massive stimulus program a year ago, encouraged by record gains in annual wage deals. Those pay increases suggested consumers were in a position to help drive prices and growth, supporting the inflation trend.
The bank’s first rate hike in 17 years was followed by two more in the space of months, the swiftest pace since 1989, when it was at the peak of a "bubble economy” that burst shortly afterward. Economists expect the BOJ to hold its fire this week before raising rates again, most likely in July.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.