FJP - Japan Ends Its Negative Interest Rate Policy
2024-03-29 03:30:00 ET
Summary
- After many years of low and negative interest rates, the Bank of Japan has changed course, creating opportunities for Japanese investors and implications for global markets.
- The impact of the policy change on the USD-JPY rate is likely to be gradual, given that it was well-telegraphed.
- Industrials may benefit from a revival in investment. Consumer discretionary companies are beneficiaries of rising wages and a return of pricing power.
By Manraj Sekhon, CFA, Chief Investment Officer, Templeton Global Investments
The Bank of Japan (BoJ) ended its negative interest rate policy (NIRP) and raised rates by 10 basis points to a range of 0.0-0.1% on March 19, 2024. This decision signals policymakers' confidence in their deflation fight. The prolonged period of low and negative interest rates in Japan has put downward pressure on the USD-JPY exchange rate. It also encouraged Japanese investors to buy higher yielding foreign assets and created the right environment for a carry trade - borrowing Japanese yen to invest in higher yielding currencies....
Japan Ends Its Negative Interest Rate Policy