Japan’s long-term interest rates have risen to over 0.8% since November last year. Bond selling has become predominant as expectations for further interest rate hikes by the Bank of Japan are increasing and long-term interest rates in the United States have risen sharply due to upward swings in the Consumer Price Index (CPI).
The yield on newly issued 10-year government bonds, an indicator of long-term interest rates, was 0.83% in trading on the 11th, the highest level since November 14, 2023. It has since increased to 0.835%.
Even after the Bank of Japan raised interest rates for the first time in 17 years in March, the monetary easing environment continued, and long-term interest rates rose slowly, but they have recently been raised to take into account additional interest rate hikes. . Investors around the world are closely watching the Bank of Japan’s next move, and a rise in long-term interest rates could be a trigger to encourage investment money to return home.
Naoya Hasegawa, chief fixed income strategist at Okasan Securities, said, “In the U.S., expectations for interest rate cuts are being postponed, and there is an awareness that the Bank of Japan will raise additional interest rates in the summer or fall.”
In an interview with the Asahi Shimbun newspaper last week, Bank of Japan Governor Kazuo Ueda said he would consider raising interest rates further if the “certainty” of achieving the 2% inflation target increases further. Governor Ueda stated in the Diet on the 10th that if the depreciation of the yen causes import prices to rise significantly and the risk of underlying prices rising by more than 2% increases, “we will have to consider changing monetary policy.” I expressed my opinion.
The yen price in the foreign exchange market temporarily fell to the 153 yen level to the dollar in response to the March US CPI announced on the 10th, hitting a new low in about 34 years. Yen selling and dollar buying, conscious of the difference in interest rates between Japan and the United States, continues unabated, reaching a level of foreign exchange intervention that has traders wary. The Bank of Japan is likely to discuss upward revisions to its consumer price index (core CPI excluding fresh food) outlook for fiscal 2024 at its monetary policy meeting this month, in response to favorable wage increases and other factors.
Bank of Japan to discuss upward revision of FY24 price outlook due to strong wage increases – officials
The last time long-term interest rates rose to the 0.8% level was in early December 2023, when Governor Ueda said that monetary policy would become “even more challenging.” In early November, the rate rose to 0.97% against the backdrop of growing expectations for policy revisions. After that, early observations of policy revisions were set back due to factors such as the Noto Peninsula earthquake in January of this year, and the rate temporarily fell to the 0.5% level.
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2024-04-11 00:04:37
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