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Japan: Interest Rates Surge As Monetary Policy Shifts

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Wednesday, May 10, 2006 11:34 p.m. (JST)

Interest Rates Surge Amid Concerns Over Monetary Policy Shift

TOKYO (Nikkei)--Short- and long-term interest rates are rising sharply on speculation that the Bank of Japan may end its zero interest rate policy soon

And Gordon "Miracle Economy" Brown thinks he can keep IR lower than anywhere else in the world bearing in mind that his HPI and MEW economy came courtesy of cheap Japanese credit. The problme is that IR on that credit are rising--and a lot faster than he thought (if he did think, that is).


Edited by Realistbear

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The same story from Bloomberg.


Very significant IMO "Governor Toshihiko Fukui said on May 7 the bank ``will take a few weeks'' to remove excess money, which it wants to do before raising borrowing costs"

Of course its starting from a negligably low base, but it is reported that excess Japanase liquidity was used in all sorts of Global carry trades which will become progressively less attractive. Of course the Yen appreciation probably made some of the lower yield plays unattractive since the hedging costs have gone up.

Ho hum.. Maybe, now we start to see the credit tide going out, and we wait to see who will be left without swimming trunks...

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