Long-Term Impact of the Bank of Japan's Important Decision
As this move by the BOJ will be the first such move in seventeen years, we really must not underestimate the importance of this decision.
This week should have lots of fireworks as the Federal Reserve Open Market Committee (FOMC) and the Bank of Japan (BOJ) meet to decide the future course of interest rates in their respective economies. In a way, the BOJ meeting is more interesting as Bank of Japan Governor Kazuo Ueda and his board have decided today to proceed with the first rate hike in Japan in seventeen years.
Suggesting that the BOJ is cautious is an enormous understatement. The BOJ has been saddled with a brutal job for the past thirty-four years as the bursting of Japan’s real estate and stock market bubbles led to a multi-decade, crushing deflation. Yes, the BOJ’s policies in the 1980s contributed to the bubble, but dealing with the aftermath has been a very rough task.