Such rhetoric is seen as a harbinger of an imminent policy pivot by the Bank of Japan, otherwise it would be enough to maintain the current negative interest rate policy.
Earlier, Bank of Japan Deputy Governor Ryozo Himino also hinted that the Bank of Japan may soon end the world's last negative interest rate policy, representing a clearer signal from the BOJ leadership.
This means that Japan is likely to really end its negative interest rate policy and raise interest rates for the first time in 17 years.
The probability of the Bank of Japan ending negative interest rates this month has soared from 2% to 45%, and many believe that the Bank of Japan will gradually exit its ultra-loose policy next year, and some bet that the Bank of Japan will act as early as January.
In the past year or so, Western countries have followed the United States in raising interest rates, and only Japan and China have continued to cut interest rates and maintain low interest rates, both of which are aimed at stimulating the economy.
And now, when the Federal Reserve pauses interest rate hikes and is about to start a cycle of interest rate cuts, the Bank of Japan has "declared war" on the Federal Reserve, ending its negative interest rate policy for many years, and choosing to raise interest rates against the trend, which is vividly called the "financial Pearl Harbor incident in the United States" by some **.
Historically, the global market may be out of luck.
Why is Japan raising interest rates at this time?
In fact, Japan also has its own difficulties, and it has no choice but to do so.
As you may know, at present, led by the United States, the level of interest rates in the United States and Western countries is generally at a high level, especially in the United States, despite the last two pauses in interest rate hikes, the federal ** interest rate remains at 525%-5.50% is high, so the dollar has been relatively strong.
As a direct result of this, the yen fell again and again, until some time ago, when it finally collapsed completely.
On November 5 this year, the USD/JPY exchange rate has fallen all the way to 15195, a record high.
And when Kazuo Ueda opened his mouth and released "hawkish" remarks, the yen exchange rate ushered in a long-awaited surge, and the yen soared against the dollar by 2 on December 739%, the biggest one-day increase this year.
On the other hand, in the past, Japan maintained a negative interest rate policy because the domestic economy seemed to be a pool of stagnant water, and even if it was a negative interest rate, the CPI data fell again and again, and there was no sign of improvement.
But now the situation has changed, and Japan's CPI data has shown signs of recovery after a rare 19-month streak**, although it increased by 2 year-on-year in November6%, the growth rate has slowed, but it is still in the moderate inflation range.
It is precisely for this reason that Japan chose to "defy" the Federal Reserve, raise interest rates against the trend before the dawn when the Fed is about to start cutting interest rates, and once again staged the "Pearl Harbor incident" and embarked on an independent economic route of its own.
In the past, the Bank of Japan maintained a negative interest rate policy for a long time, and in addition to stimulating the economy, another reason was that it owed a lot of debt, which could not be paid off.
According to some data, Japan's debt is now as high as 11 trillion US dollars, and according to investors' estimates, the yen debt has now accounted for about 250% of Japan's GDP.
How outrageous is this number?
We often say that the scale of the US debt has soared, reaching $33 trillion, but even so, it only accounts for 1 percent of the US GDP4 times, a far cry from Japan.
And don't forget, the United States has dollar hegemony, and 33 trillion U.S. debts have been shared with the whole world, but Japan is just a follower of the United States, and it does not have the strength of the United States.
Therefore, although the scale of debt is quite terrifying, Japan maintains a very low interest rate level, and it will not not pay off the interest and cause a debt crisis.
It's just that the situation has changed now, seeing the yen exchange rate **, and the continuous outflow of local assets, Japan has made a "riotous operation":
I started to think about changing the previous negative interest rate policy, and simply everyone was done playing, and no one was over.
As we mentioned earlier, Japan itself already owes a lot of debt, and the reason why there is no thunderstorm is largely due to the negative interest rate policy implemented by itself, which has alleviated a large part of the pressure.
However, as Japan begins to raise interest rates, Japan's interest expenses are bound to increase, and the outbreak of Japan's debt crisis in the future will inevitably affect the global economy.
On the other hand, in the past, because the yen has maintained ultra-low interest rates for a long time, and Japan itself is a very developed financial and foreign exchange market, global investors are keen to use it as an "international token" and like to use yen loans to invest all over the world.
After all, there is cheap money that does not need to be used in vain, and who doesn't like a business where money makes money.
But the key point now is that as Japan begins to raise interest rates, the cost of borrowing yen for global investors will become higher, and the financing demand for yen will inevitably be greatly reduced, and global investment activity will naturally decline.
This reason is very simple, the yen has become not cheap, of course everyone is not willing to borrow yen to invest, otherwise in the end of the toss for a long time, the result is a loss-making transaction, wouldn't it be a loss of wife and soldiers.
In the context of the global economic downturn, the yen's interest rate hike has undoubtedly made matters worse.
Finally, what is more "metaphysical" is that, according to historical experience, every time the Bank of Japan raises interest rates, there will be all kinds of bad luck, and even trigger an economic crisis.
For example, at the turn of the millennium, the Bank of Japan just raised interest rates from zero to 025%, and the dot-com bubble burst, and just two weeks later, the Nasdaq began a decline of more than two years.
Another example is the yen interest rate hike in 2007, and a few months later, the subprime mortgage crisis in the United States broke out, and a financial crisis swept the world.
So now that Japan is going to raise interest rates again, everyone is inevitably worried, and no one can say for sure, whether the global market will be unlucky this time and be brought down by Japan to the global economy.
Write at the end:
Although every time the Bank of Japan raises interest rates, it casts a shadow over the global economy, but this does not mean that the two are necessarily linked.
It's just that now that the U.S. interest rate cut is imminent, and the U.S. recession crisis is imminent, which has brought great risks to the global economy, and now Japan is going to cut interest rates again, and the global economic uncertainty will become stronger next year.