Thursday, August 23, 2007

BoJ bottles it

Bank of Japan keeps rates on hold

The Bank of Japan has opted to keep its key interest rate unchanged at 0.5% for the sixth month in a row.

Posted by holding out @ 09:13 AM (1100 views)
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6 thoughts on “BoJ bottles it

  • japanese uncle says:

    This decision was well predicatble as Fukui understandably did not wish to be remembered as the man who placed the final straw and unleashed the global financial armagedon.

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  • fahrenheit451 says:

    Only problem is that they are considering 0.25% increases.
    Not proportional increases, (such as a 10% increase of the base rate, to the nearest 0.1% … upto 10% & full 1% increments after this …)

    0.00% -> 0.25% = infinite increase, it’s do or die for many businesses.
    0.25% -> 0.5 = 100% increase, extreemly painful for anyone budgeting for the future.
    0.5% -> 0.75% = 50% increase, very painful.
    etc.

    But there again this is only the base rate, not the lending rate anyway.

    The economy is therrefore built on sand. Expect a deep recession when they finally “have” to put rates up to match the rest of the world.
    Or perhaps they never will ?

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  • japanese uncle says:

    fahrenheit451

    You really hit the point!! Congratulations!

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  • sold 2 rent 1 says:

    Always expect the unexpected.
    Maybe over the next 2 years the USD, GBP and EUR IRs will fall to meet Japan’s level.
    Either way, the carry trade is surviving mainly on mainstream (housewives and grannies) players and this is surely a signal the game is nearly up.

    A US recession is closer than ever now. Watch those US IRs fall in 2008.

    A parallel in the housing market is the people who bought in Bulgaria, with the mindset that prices will reach Spanish levels.
    In reality, house prices in Spain will fall to Bulgarian levels

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  • planning4acrash says:

    Well, STR, I doubt Spanish levels will go to Bulgarian any time soon, unless if Bulgarian wages meet Spanish wages. And, Jap Uncle, you are right, they may not raise interest rates, but that is the choice of inflation. You can work your way out of a crisis by recession or inflation. I would prefer recession if I was a bank because it is a situation that the bank controls. Inflation gets out of control and is significantly more self-reinforcing and destructive. A recession gets rid of the dead wood, hyperinflation sweeps everything away and leads to extreme politics, just look at Zimbabwe and pre-war Germany.

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  • sold 2 rent 1 says:

    I don’t think spanish HPs will ever equal that of Bulgaria but they will head significantly in that direction.

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