On 12/11 ← 9/19 Bank of Japan raised rates on July 31, but
Well, the Bank of Japan raised rates on July 31st,
perhaps the timing was too poor,
or perhaps it shouldn’t have been raised at all,
and since then the Nikkei average has plummeted to record lows.
Mortgage rates have risen,
and I think households will be affected,
but I’d like to look at the positive sides here.
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Another benefit of rate hikes
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Basically, younger generations tend to have more loans for housing and cars.
In contrast,
the elderly are less likely to buy new houses or cars.
In other words, the loan burden is almost non-existent and they tend to save a lot.
From there,
for the younger generation, rate hikes will be harsh, but
for the elderly, rising interest rates mean
the interest earned on deposits will go up,
and that could work positively for the elderly.
Previously, zero-interest and negative-interest policies were in place,
so the so-called “household cash” has accumulated substantially.
With rate hikes increasing bank deposits,
in other words, as money circulates in the market,
a healthy money flow could be created,
and the economy might improve.
If rates rise, banks will want to lend to companies.
Then the money that companies kept as retained earnings too,
including for capital expenditure, may circulate in the market more.
If a good cycle of money flow is created this way, the economy could develop further.
If household cash and internal reserves become more likely to circulate in the market,
the money available in the market will increase,
and with a variety of uses,
I hope a healthy good money flow cycle will be born.
The issue here is,
where should the money be spent?
Personally, looking to Japan’s future,
I’d like to see it invested in new growth sectors.
In fields where the economy can develop and everyone prospers,
I hope large budgets are allocated.
I also want to spend money where it’s needed to contribute!
Well then!
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