- Experts doubt further BoJ rate hikes this year.
- The BOJ’s recent rate hike triggered a market sell-off, affecting equities and crypto.
As a seasoned crypto investor with a knack for keeping my finger on the pulse of global economic trends, I can’t help but feel a sense of relief at the recent speculations about the Bank of Japan (BoJ) refraining from further rate hikes this year. Having weathered numerous market storms and witnessed the ripple effects of monetary policy decisions on both traditional equities and digital assets, I’ve learned that patience is often the key to success in these tumultuous waters.
It’s surprising, even the ex-member of the Bank of Japan board proposes that there will probably be no more interest rate hikes this year, given the potential financial upheaval in markets and Japan’s slow economic progress.
Reiterating the same, former board member Makoto Sakurai in a recent interview with Bloomberg said,
As a researcher, I’ve determined that due to current circumstances, I won’t be able to embark on any hikes for the remainder of this year. However, there’s a chance that I might be able to go on a single hike by next March, but it’s uncertain at this point.
What happened until now?
After the Bank of Japan unexpectedly increased interest rates to 0.25%, marking their second such increase in 17 years, this move led to a 2.49% drop in the Nikkei index and signified a significant shift away from Japan’s decades-long policy of extremely lenient monetary policies.
As a researcher, I noticed that both the traditional equities market and the cryptocurrency market underwent a significant downturn in response to the bold move taken by the Bank of Japan.
As I delve into the intricacies of the global crypto market, it’s fascinating to note a peculiar correlation between Japan’s economic fluctuations and the cryptocurrency landscape. It seems that movements in Japan’s economy can directly influence the crypto market, and conversely, significant changes in the crypto market may reflect back on Japan’s economy.
What’s behind no rate hike?
For people who are unsure, the change in market feelings might be linked to the overnight index swap market, a tool that gauges predictions about future adjustments in interest rates.
At the moment, it appears less probable that the Bank of Japan (BOJ) will raise interest rates again this year, contrary to the immediate expectations after the July rate increase.
Elaborating on the same Sakurai added,
“It’s beneficial that they chose to transition from an environment with nearly non-existent interest rates to one where the base rate is a more typical 0.25% as they resume regular monetary policy.”
In this context, Sakurai admits that shifting towards a more conventional monetary policy approach was both essential and demanding, requiring significant resources.
Without a doubt, Sakurai advised the BOJ to tread carefully, proposing they take a moment to evaluate the effects prior to considering additional interest rate increases.
This highlights how a small and uninformed decision can have an impact on the economy as a whole.
That being said, Sakurai put it best when he highlighted,
“Economic scholars often rely too heavily on numerical data, leading them to present straightforward conclusions. However, the real-world economy isn’t as straightforward. Therefore, decision-makers must also use intuition and adaptability when dealing with economic complexities.”
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2024-08-12 15:04