Japan’s central bank surprises markets

Japan’s central bank surprises markets
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Islam News – This summer, as central banks increased interest rates in an effort to fight inflation, the Bank of Japan alone stood firm and kept rates ultralow. Yesterday, it seemed to have a change of heart.

The bank suddenly eased its bond-yield policy, which could open the door for future interest rate increases. The change surprised investors in Asia, who had not expected such a move until next year.

After the announcement, the yen rose by 3 percent. Earlier this year, the currency traded at a decades-long low against the dollar. Japan intervened to prop up the currency.

A stronger yen could reduce inflationary pressure on Japan’s shrinking economy. In October, inflation was at 3.6 percent. That’s much lower than in other parts of the world. But households and businesses are still straining under higher food and energy prices.

Interest rates: The bank’s insistence on keeping rates ultralow has given families and businesses a steady flow of cheap money — but has also exacerbated the yen’s weakness. The bank said that policy would not change.

ٍSource: The New York Times

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