Nikkei is now getting in on the worst kept secret. They say that the DOJ is reportedly considering a rate hike to 0.25%. They also add that the central bank is looking to decide by how much and how fast to reduce its monthly purchases of Japanese government bonds.
Meanwhile, the Nikkei reports that Japan’s finance ministry and cabinet office are expected to accept BOJs rate hike if policy board goes that route.
A BOJ source says that:
- Overall, higher rates will benefit households, but
- Higher rates are expected to intensify pressure on Japan’s heavenly dated public sector to improve its fiscal health
Borrowing at higher rates does not help the government deficit
Although the Fed does not worry about federal budget deficits other than to say that they can’t be sustained, can have an influence if they decide not to lower rates and instead pay higher rates for government debt. .
This article was written by Greg Michalowski at www.forexlive.com. Source