Suryaa Business Desk: Central Bank of Japan (Bank of Japan BOJ)'s policy of leveraging and interest rate hikes from the domestic financial sector... The two giants of the domestic financial sector have divergent views on the leverage policy to be adopted by the Central Bank of Japan (Bank of Japan BOJ) and interest rate hikes. While former Bank of Japan Governor Haruhiko Kuroda has favored further interest rate hikes, an official who served as a former deputy governor under him has warned that more vigilance is needed in the current situation. The comments of both of them have attracted the attention of international financial circles in the background of different expectations on inflation and economic stability in Japan, which is the world's third largest economy.
Former governor Haruhiko Kuroda said that the Japanese economy is gradually gaining momentum and that progress towards achieving the inflation target is visible, so raising interest rates further is the right way to go. He commented that it is imperative to get rid of the low interest rate policy that has been in place for a long time and bring the markets back to normal. On the other hand, the former deputy governor expressed his concern that hasty decisions could endanger the economy. It is advised to take steps on rate hike only after a thorough review of the international uncertainties and the domestic wage growth rate.
These differences have gained prominence as Japan's central bank will soon hold its key interest rate review meeting. Global investors and financial markets are keenly watching what direction the current leadership of the central bank will take. Financial analysts believe that the decision to hike interest rates is likely to have a significant impact on the value of the Japanese yen currency and the trading pattern of Asian markets.