Teaser: Bank of Japan Set to Raise Interest Rates Today, Fed Rate Cut in Question
BlockBeats News, December 19th: The Bank of Japan will announce its interest rate decision this morning between 10:30 AM and 12:30 PM (most commonly around 10:45-11:30, UTC+8). Governor Haruhiko Kuroda will hold a press conference at 14:30. The probability of a "25-basis-point rate hike in December" in Japan has surged to 98%. If the rate hike proceeds as scheduled today, Japan's benchmark interest rate will rise from 0.50% to 0.75%, reaching the highest level since 1995, marking Japan's formal departure from the era of ultra-low interest rates that has lasted for 30 years.
Japan's renewed rate hike signal has sparked concerns in the US market, leading to worries about potential capital outflows from the US ahead of the Fed's interest rate cut. Japan is the largest foreign holder of US government debt, holding around $1.2 trillion in US Treasury securities as of September. Wall Street is concerned that the rise in Japanese bond yields will attract funds away from US investments, leading to an increase in US Treasury yields. The decline in US bond yields earlier this year was a catalyst for the Fed to resume rate cuts, lowering mortgage rates and boosting the stock market. The stock market often benefits from lower bond yields, and a renewed increase in US bond yields will hinder rate cuts.
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