The BoJ ends negative interest rates
The BoJ has moved from marginally negative to marginally positive interest rates.
After hinting at it over recent months, the Bank of Japan finally edged away from negative interest rates, increasing the policy rate from -0.1% to a range of 0-0.1%, where the policy rate has been near zero for most of the time since the end of the gigantic asset price boom of the 1980s.
The BoJ also scrapped yield control for 10-year bonds and the commitment to expand the monetary base until the core CPI ex-fresh food was growing at an annual rate of more than 2%, while ending new purchases of non-government financial assets.
The Japanese economy has improved significantly over recent years, with low unemployment, rising consumer prices, and rising asset prices, but Japan still faces significant challenges.
Most notably, Japan's population continues to shrink, while there is an extremely large overhang of
public debt, where a sustained return of inflation would help reduce the real
debt -servicing burden at the margin.
A sustained recovery in the Japanese economy is a positive for Australia in that Japan remains a key trading partner, as well as still being one of the largest economies in the world, but more uncertainty remains around weakness in China, which has been held back by a sustained correction in its property market in an echo of Japan in the late 1980s/early 1990s.
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Based in Sydney, Kieran Davies is Chief Macro Strategist at Coolabah Capital Investments, an asset manager with 40 executives and over $8 billion in fixed-income strategies. Kieran is responsible for macroeconomic research and investment strategy, contributing to the investment decisions of the firm. Kieran has long experience as a macroeconomist in both the private and public sectors. He has worked most recently as Chief Markets Economist for National Australia Bank and was previously Chief Economist, Australia and New Zealand, for Barclays Bank and ABN Amro Bank/RBS. Kieran also worked as Principal Adviser on the macroeconomy and budget policy in the Commonwealth Treasury and Director of Forecasting.
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Based in Sydney, Kieran Davies is Chief Macro Strategist at Coolabah Capital Investments, an asset manager with 40 executives and over $8 billion in fixed-income strategies. Kieran is responsible for macroeconomic research and investment strategy,...
Based in Sydney, Kieran Davies is Chief Macro Strategist at Coolabah Capital Investments, an asset manager with 40 executives and over $8 billion in fixed-income strategies. Kieran is responsible for macroeconomic research and investment strategy,...
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