Rather than celebrating the Bank of Japan¡¯s interest rate hike on Friday, the highest level in three decades, as a milestone comeback for an economy that has wrestled with deflation and sluggish growth for a generation, Gov. Kazuo Ueda would prefer that you focus on how low rates still are.
So much so that the bank indicated there¡¯s plenty of scope for additional increases.
Much depends on his next move and how quickly he does it. It¡¯s true that borrowing costs, even after four increases since early last year, remain very low relative to other large economies. Friday¡¯s lift took the main rate to 0.75%. The gap is especially big with the U.S., which has often been cited as a source of weakness for the yen. Ueda is reluctant to call the hikes a tightening; he emphasizes that policy remains accommodative.
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