Japan Raises Interest Rates to Highest Level Since 2008
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Japan’s main bank just raised its key interest rate to 0.5%, the highest it’s been since 2008. Until now, Japan has used very low or even negative rates to fight falling prices (deflation), but better paychecks and slightly higher prices made officials believe it’s time for a change. The bank’s governor, Kazuo Ueda, says Japan’s economy looks stronger and the world market didn’t panic after President Trump’s recent economic moves.
Economists hope this rate increase will help people spend sooner rather than waiting for lower prices. Businesses, too, may become more efficient if loans aren’t always super-cheap. Still, some worry that wages aren’t rising fast enough to keep up with everyday costs, especially since Japan’s population is shrinking and growth has been slow for years.
Even with those concerns, Japanese leaders think moving away from ultra-low rates marks a new chapter for the country’s economy. They believe it could finally break the cycle of deflation that dragged on for decades and steer Japan toward better long-term growth.
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