The Bank of Japan raised its policy interest rate by 25 basis points to 1.25%, the highest level since 1995, amid concerns over rising inflation and a weak yen.
Key takeaway
Bank of Japan raises policy rate by 25bps to 1.25%, highest since 1995.
- Step 1 · The triggerThe Bank of Japan raises its policy rate by 25bps to 1.25%, tightening Japanese monetary conditions.
- Step 2 · Knock-onThe interest-rate gap between the US and Japan narrows, strengthening the yen and triggering unwinding of global yen carry trades.
- Step 3 · Reaches youUS SMEs with JPY-denominated input costs or contracts face higher import and hedging costs as the yen appreciates and FX volatility rises, impacting their cost base.
The trigger is reported by the source below. The steps that follow are Branch²’s traced reasoning — how the shock could reach a business like yours, not a prediction.
Source: CNBC
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