One year on from Japan¡¯s historic rate hike, profits at its biggest banks are soaring to records, while price rises are forcing consumers to cut back and higher borrowing costs are fueling a political battle over how the government can rein in its outlays.
Bank of Japan Gov. Kazuo Ueda scrapped the world¡¯s last negative interest rate and its massive stimulus program a year ago, encouraged by record gains in annual wage deals. Those pay increases suggested consumers were in a position to help drive prices and growth, supporting the inflation trend.
The bank¡¯s first rate hike in 17 years was followed by two more in the space of months, the swiftest pace since 1989, when it was at the peak of a ¡°bubble economy¡± that burst shortly afterward. Economists expect the BOJ to hold its fire this week before raising rates again, most likely in July.
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