The central bank of Japan has increased the cost of borrowing to its highest level for 17 years, in order to slow down the price increase.
The decision of the Bank of Japan (BOJ) to raise its short -term rate in the short term to 0.5 % comes only a few hours after the last economic data showed last month that prices had increased to the fastest rate in 16 month.
The latest increase in BOJ’s interest rates in July, as well as a low employment report in the United States, surprised investors around the world, which sparked a massive stock market sale.
The governor of the bank, Kazuo Ueda, announced in advance the latter increase in rates in order to avoid a new shock on the markets.
According to official figures, basic consumer prices in Japan increased 3 % in December.
Last year, the BOJ increased the cost of loans for the first time in 17 years.
This decision comes as some of the largest companies in the country increase the wages of their employees to help them face the cost of living.
Salaries in the country have stagnated since the late 1990s, prices increasing very slowly, even lowering, forcing political decision-makers to stick to an ultra-seplex monetary policy until after the pandemic.
