- Japan has experienced low interest rates for a very long period
- So, some quarters of the public don’t know what it is like for interest rates to rise
- When interest rates rise, government’s debt-financing costs will increase; weigh on spending
- Government must ensure public, market trust in Japan’s finances is maintained
It’s more so a case over the past year I would say. Right now, the BOJ is finding it tough to push forward with the next rate hike. Markets are also sensing that with only ~18 bps priced in by year-end for now. No rate hikes are expected through the summer at the very least.
This article was written by Justin Low at www.forexlive.com.
