00:00The Bank of Japan raised interest rates today with inflation risks mounting for multiple reasons,
00:07one being rising oil costs from the Middle East conflict, which is affecting other countries as well.
00:13Also, the weekend persisting and pushing up import costs.
00:17There's also strong demand for AI-related goods that's pushing up prices of chips and other products that use these
00:25chips.
00:25So overall, we're seeing a broadening of price pressures that will keep the BOJ on track to raise interest rates.
00:33So what does this mean for the yen?
00:36The yen has weakened despite the BOJ's rate hike, which typically should be pushing up the currency.
00:43What's happened is that among the nine board members who voted, two doves have dissented.
00:50This was taken as a sign by markets that the BOJ might not be aggressive enough in tightening monetary policy.
00:59And when other central banks are raising rates, in comparison, the BOJ was seeing less hawkish.
01:06So Washington wanted the BOJ to raise interest rates more steadily because they thought that the low interest rates and
01:16the slow BOJ rate hikes were among the key reasons for keeping the yen weak and destabilizing global financial markets.
01:24The BOJ did deliver a 25 basis point rate hike today.
01:29So I think that will be clearing the minimum threshold from Washington.
01:34But it's unclear whether this is enough because the yen has weakened despite today's action.
01:40So I believe the BOJ will remain under very strong pressure.
01:44So markets are really focusing on how quickly and how soon the BOJ will raise rates ahead.
01:54That's really hard to tell.
01:55But one thing is for sure is that the BOJ is fairly cautious about speeding up the pace of interest
02:04rate hikes, despite mounting inflationary pressure.
02:07That's because Japan has experienced very long periods of zero interest rates.
02:14So that's different from other countries.
02:16That makes the central banks cautious and want to kind of gauge how households and companies would react to every
02:26single rate hike.
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