Market views on monetary policy in Japan and the United States have changed since August. Expectations of a rate hike have strengthened in Japan, while additional rate hikes are being discussed in the United States against a backdrop of economic expansion.
Market views on monetary policy in Japan and the United States have been changing rapidly since August. In Japan, amid entrenched inflation and a weaker yen, views have strengthened that excessively low interest rates need to be corrected, and the possibility of a rate hike is being discussed.
In the United States, given the strength of the economy, some believe that the Federal Reserve needs to raise rates to contain upside risks to policy. Japan’s neutral rate is estimated at approximately 1.1–2.5%, while the neutral rate in the United States is estimated at 3.00–3.50%, suggesting a scenario in which interest rates in both countries exceed neutral levels.
Changes in monetary policy are generally considered to have lagged effects of approximately 1–2 years, so they may not affect the economy immediately. Interest-rate movements, however, could affect stock prices, bond yields and currency values.
Going forward, attention will focus on whether a 0.25-percentage-point rate hike could once again cause expectations of additional rate hikes in the United States to influence market direction. Shimamine Yoshikiyo (嶋峰義清) explains that the material is based on information available when it was prepared.
This article is not intended to solicit investment in any specific product or security, but solely to provide information.