Japan’s Economy Fear Over Rate Hikes In The West

Japan’s finance minister said on Tuesday that the country will monitor how rising interest rates in Western countries influence its economy since higher bond yields would raise borrowing costs for the industrial world’s highest public debt load.

Shunichi Suzuki made the statement as the parliament’s strong lower house prepares to adopt the fiscal 2022/23 budget on Tuesday, which includes a record $940 billion in expenditure, paving the way for the budget’s final approval through the legislature in March. “As interest rates rise, interest payments will climb with them, putting pressure on Japan’s budget,” Suzuki said following a cabinet meeting with reporters. “We can’t rule out the possibility that if people lose trust in our financial management, it would have a big impact on policy implementation and people’s livelihoods.”

Rates Higher Than Ever

Japanese government bond (JGB) rates have lately risen to multi-year highs, fueled in part by expectations that the Bank of Japan (BOJ) may have to reduce monetary support in response to global central banks’ tightening measures. As investors seek safe-haven assets as a result of the Ukraine tensions, yields have dropped somewhat.

The BOJ entered the market this month by promising unlimited fixed-rate bond purchases to halt a climb in the benchmark 10-year JGB yield near its yield curve control policy’s implied 0.25 per cent tolerance ceiling. Suzuki also stated that Japan will work with the Group of Seven advanced countries to address the Ukraine crisis while keeping a close eye on the impact on its economy.

In Tokyo, Japan, Finance Minister Shunichi Suzuki gave his policy statement while wearing a protective face mask at the commencement of an emergency session of the lower house of parliament, during the coronavirus (COVID-19) epidemic.

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