bullish
Change of Fortunes Result in Japanese Megabanks’ Leading Road to Recovery
17 Views26 Sep 2023 11:00
SUMMARY
- Despite rising expectations by global markets that were awaiting a signal towards normalizing monetary policy by the Bank of Japan (BoJ), in September, the BoJ decided to leave its ultra- loose interest rates unchanged in spite of domestic consumer prices rising faster than the central bank’s 2% mandate.
- The central bank’s decision to not tighten credit conditions, especially given the differential between BoJ’s policy rate and that of the US Federal Reserve’s (Fed) widening, led to the JPY tumbling against the USD to a 10-month low of JPY 148.46/USD.
- Such domestic headwinds continue to put pressure on Japanese banks’ credit profiles which have been plagued by low domestic interest rate margins and fallout from decades of weak economic growth.
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