The US Federal Reserve announced interest cut rates by 50 bps, and Hong Kong slashed rates by 0.5% this week, but the Bank of Japan has decided to keep its interest rate unchanged.
On Friday, Bank of Japan announced unchanged interest rates at 0.25% after the government data showed August core consumer prices increased 2.8% year-on-year. Additionally, the data revealed that the Core National I, excluding fresh food, hit a 6-month high of 2.8%, rising for the fourth consecutive month and was in line with market expectations.
The decision to keep the interest rates intact reflects centralized Japanese bank’s apprehension towards increasing rates. Increasing rates could have also added a drag to the country’s economic situation, reminding one of what unfolded after BOJ’s rate hiked to 0.25% in July. Rate hikes in July triggered an abrupt volatility in both stock and currency markets , and thus, now BOJ wants to calculate the impact of this previous increase before making further changes.
The global interest hiking cycle had kicked off this week with the US Fed’s decision to cut rates by 50 bps, following which the Hong Kong Monetary Authority cut base interest rates by 0.5% to 5.25%.
Hong Kong’s decision to reduce rates was in accordance with its efforts to relieve high borrowing costs, slowing economic growth and the difficult real estate market.
In all of this, the crypto market did respond positively to Fed’s decision and showed a 2% rise in the market cap post the rate cut.
