Scribd
Upload
4 views26 pages

Group 12

The document discusses the Bank of Japan's recent interest rate hike and its implications, highlighting Japan's long-term economic stagnation and the challenges posed by high government debt. It analyzes the reasons behind the interest rate increase, including inflationary pressures and currency depreciation, while also examining historical impacts of such hikes on the economy. The conclusion suggests that Japan's interest rate changes have limited effects on global markets compared to U.S. interest rate movements.

Uploaded by

Mr. Najabat Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
4 views26 pages

Group 12

The document discusses the Bank of Japan's recent interest rate hike and its implications, highlighting Japan's long-term economic stagnation and the challenges posed by high government debt. It analyzes the reasons behind the interest rate increase, including inflationary pressures and currency depreciation, while also examining historical impacts of such hikes on the economy. The conclusion suggests that Japan's interest rate changes have limited effects on global markets compared to U.S. interest rate movements.

Uploaded by

Mr. Najabat Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 26

Research on macroeconomic

Research on the Bank of


Japan's interest rate
hike
2024-05-30 Cheney Sophia Romala
2024-03-19 Japan exits the era of negative interest rates
-01- Japan’s Strange
Monetary Policy

CONTEXT -02- Analysis of the


reasons
The impact of
-03-
interest rate hikes
in Japan
Monetary Policy

Part one
Japan’s Strange
Monetary Policy
Cheney //
Japan’s Strange Monetary Policy

After the bursting


Japan’s economy:
30 years of loss
of Japan's financial
bubble in 1990s,
Japan's social
economy fell into a
long-term recession.
Japan’s Strange Monetary Policy
Japan’s Strange Monetary Policy

A more aggressive policy

QQE
Qualitative Quantitative Easing

Treasury bonds + ETFs + some funds


Allowing the purchase of long-term government bonds
to exceed the upper limit of paper money issuance

Shinzo Abe
Japan’s Bizarre Monetary Policy

The Bank of Japan has become the largest


investor in the Japanese stock market
Japan’s Bizarre Monetary Policy

The Bank of Japan also


introduced the yield
curve control (YCC)
framework to keep the
yield curve of 10-year
treasury bond at the
target level of zero.

In the past decade,


the yield of Japan's
10-year bonds has
remained below 1%.

However, this approach will bring two serious side effects


The government's debt scale is rapidly expanding
Japan Government Debt to GDP

Japan's GDP of 2.66


years can repay the
Japan government's
debt.
The depreciation of the Japanese yen is becoming
increasingly severe

2023 Japan’s 11,200 billion USD


government debt
After the Federal
Reserve raised 2023 Japan’s 450 billion USD
government revenue
interest rates, Japan
did not raise them If 1%, interest 112 billion USD
due to concerns
about a government If 2%, interest 224 billion USD
debt crisis.
AMOST HALF Data source: Wind
OF THE
REVENUE
The depreciation of the Japanese yen is becoming
increasingly severe

Since March 2022, the


Japanese yen has
depreciated wildly
Japan’s Abnormal Economic State

Raising Government
Interest

?
Debt Crisis
Rate
How to
solve it
Not
Raising Currency
Interest Depreciation
Rate
Part two
In-depth analysis of the reasons
for Japan's interest rate hike
Sophia
//
Background environment analysis
①After the bubble economy burst, the Japanese economy
fell into a long-term stagnation.
②Japan's aging population is serious and the proportion
of the elderly population is rising.
③Market demand is weak,
prices are falling and there is a
risk of deflation.
At the same time, Japan's government debt-to-GDP ratio has remained
high for a long time, if interest rates are raised, the government's debt
burden will increase sharply and interest expenses will soar.

Japan's government debt as a percentage of GDP


Analysis of the reasons for the interest rate hike

Japan's historical CPI situation USD/JPY exchange rate


Dealing with inflationary pressures and currency depreciation

CPI rose to
2%
year-on-year
Restore market function
and safeguard financial
stability
The real yield is also only 0.05%

Labor market improvement


and wage growth
Annual wage increase of 5.28%
Research on the Bank of Japan's interest rate hike

Part three
The impact of interest rate hikes in
Japan
By ： Romala
The impact of interest rate hikes in Japan

Historical Impact of Japanese Interest Rate Hikes

1989 2000 2006


Stock and property Significant turmoil U.S. housing bubble
bubbles burst within in American stock burst in 2007, leading to
two years markets the 2008 financial crisis
The impact of interest rate hikes in Japan

It seems that
Japanese interest
rate hikes have
historically
coincided with
global market
turmoil.

IS THIS TRUE ？ The answer is no.


The impact of interest rate hikes in Japan

The exchange rate of the yen


Japan's interest rate
hike was unusually
Promulgation of interest cautious and small
rate hike policy

Keep the disappointment


of the market for
falling the yen

the depreciation
of the yen
The impact of interest rate hikes in Japan

Foreign capital inflow = The return of yen


Japan raises interest
rates

Yields get higher


A large number of

+
Japanese investors
The return on have invested in
investment overseas industries
becomes higher

The return of yen will not


Foreign capital
cause a huge change in the
flows into Japan Pie chart of the size of Japanese
world economic pattern. overseas assets
The impact of interest rate hikes in Japan

Look at history again The U.S.


The dollar has
always really
economy
affected the
warming up
pattern of world
financial markets,
A hike in US and the impact of
interest rate Japan's interest
rate hike on the
A hike in market is very
Japanese limited.
interest rate

Just in time for a recession in the


United States ！
Business cycle chart
Research on the Bank of Japan's interest rate hike

THANKS FOR
LISTENING ！ 2024.05.30 Cheney Sophia Romala

You might also like