BoJ Rate Hike Sparks Global Market Turmoil
The Bank of Japan (BoJ) raised its policy rate by 25 basis points to 1.25% in a decision split 7-2 among policymakers, sending shockwaves through global markets.
This hike marks the highest interest rates since 1995 and comes just three months after the last one, a significant acceleration from previous tightening cycles.
The move was met with unexpected reactions: despite the rate hike, Japan's 10-year government bond yield fell nearly five basis points to 2.947%, while the yen weakened to 156.64, defying expectations that it would strengthen after the announcement.
Nigel Green, CEO of deVere Group, warned that this development is a 'credibility problem' and may lead to a shift in Japanese capital from funding US and European markets, increasing borrowing costs globally as governments issue record volumes of debt.