Japanese business groups welcome Bank of Japan's first rate hike in 17 years.

23 Mar, 2024

Japanese business groups welcome Bank of Japan's first rate hike in 17 years.

The Bank of Japan's recent decision to hike interest rates for the first time in 17 years has garnered positive reactions from Japan's business leaders. Masakazu Tokura, Chairman of Keidanren, the nation's largest business lobby, praised the move as "the appropriate policy decision at the appropriate time," citing indications of a positive cycle between wages and prices.

This announcement comes after the BOJ's decision to end eight years of negative interest rates and other unconventional policies, reflecting a shift towards a more conventional monetary approach. Despite expectations for a gradual increase in borrowing costs, analysts anticipate that interest rates will likely remain near zero for the foreseeable future due to ongoing economic fragility.

The decision follows reports of stronger-than-expected wage increases by companies, fueling optimism for increased household spending and sustained economic growth. Ken Kobayashi, Chairman of the Japan Chamber of Commerce and Industry, highlighted the importance of moderate price increases in achieving economic stability, emphasizing the BOJ's commitment to its 2% price stability target.

Looking ahead, business leaders like Takeshi Niinami, Chairman of Keizai Doyukai, stress the importance of gradual adaptation to a changing interest rate environment. Niinami emphasized that while monetary policy plays a role, sustained economic growth requires broader efforts from businesses, particularly in areas like productivity enhancement.