Bank of Japan Statement Highlights Negative Real Rates, Fujiwara Says

A chief fund manager at Resona Asset Management, Takashi Fujiwara, said the Bank of Japan’s latest statement explicitly noted that real interest rates in the short to medium term remain negative. According to Jin10, Fujiwara said this may indicate the central bank does not want ultra-long bond yields to rise further. He added that the wording could also be a signal that if short- to medium-term rates stay low, companies can raise funds more easily and may expand into higher-risk areas. Fujiwara also said the Bank of Japan discussed the economy and prices side by side in its statement, which he interpreted as suggesting the central bank may be willing to raise interest rates further. He said that even if price increases slow due to the Strait of Hormuz being open, the Bank of Japan could still cite economic growth as a rationale for additional rate hikes.