Commerzbank economists analyze the relevance of the next Bank of Japan (BoJ) meeting next week.
The “March vs. April” question isn't really important
This is another one of those things I can't understand: the question of whether the BoJ will raise its official interest rate next week or at the next meeting on April 26. What matters is not the “when.” What matters are two completely different questions: whether the official interest rate will rise in the near future, and whether there will be a significant number of increases thereafter, or whether it will be a disaster like in 2000 and 2006, when the “normalization of monetary policy” vanished after the first steps.
The second question – what will follow after a first rate hike – is much, much more important. If the BoJ were to raise its official interest rate to 0% or +0.1% next week, this would be irrelevant for inflation and the real economy, as well as for the yen exchange rate. A movement of this type is only relevant if it can be considered the beginning of a cycle of rate hikes.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
