The world's largest economies are raising interest rates due to inflationary pressures. The latest movers include Japan, the US, and the EU. Tokyo's rate has risen to a 30-year record. Meanwhile, the US and EU are hinting at further rate hikes as their fight against inflation intensifies. Rising fuel prices due to problems with energy supplies from the Middle East are at the center of this trend, reports a 24KZ correspondent. The Bank of Japan raised its key interest rate on Friday to a 31-year high of 1.25 percent. Chief economists attribute their decision to high inflation, which has reached 1.09 percent in a year. The primary cause of this increase is said to be rising energy import costs amid shipping problems in the Strait of Hormuz. Furthermore, the yield on long-term Bank of Japan bonds has also jumped to a 30-year high amid a weakening national currency. All of this, according to experts, is fueling investor anxiety about the future of the island nation's economy.

Hidetoshi Tashiro, Chief Economist at Infinity LLC:

- Since Prime Minister Sanae Takaichi took office last October, the yield on long-term Bank of Japan bonds has risen by 80%. This growth rate is almost four times higher than in the US and 2.5 times higher than in Germany. This is a critical situation.

Analysts note that rising bond yields are reducing investment in the real sector and other risky assets. As a result, investors are shifting funds toward purchasing securities instead of investing in business projects.

Hideo Kumano, Chief Economist at the ABC Institute for Economic Research:

- Due to the fact that government bond yields have reached 3%, some companies will face increased financing costs for their projects. For example, we estimate that investment in equipment could fall to 5%. It will also become more difficult to implement the government's plans to stimulate investment in industry.

It's worth noting that until 2024, interest rates in Japan were generally negative. In this case, borrowers could repay banks less than they borrowed, or banks would pay customers extra to borrow. Previously, the country's problems included low borrowing, economic stagnation, and deflation. Buyers postponed large purchases, hoping for even cheaper goods. Consumer demand fell, forcing companies to sell their products at a lower price, losing revenue. As a result, the economy contracted and jobs were lost.

US FEDERAL RESERVE HAS RAISED ITS RATE FOR THE FIRST TIME IN THREE YEARS

The rate hike in Japan followed the US Federal Reserve's decision to raise its key benchmark for the first time in three years. The rate was raised by 25 basis points, now standing at 4%. The decision was made unanimously by all members of the Federal Reserve Board. As the Fed Chairman stated, this step was taken due to rising fuel prices and high inflation, which reached 3.5% for the year. The Fed's goal is to reduce inflation to 2% through monetary policy adjustments. The regulator also notes that the country's economy, despite everything, is performing excellently.

Kevin Warsh, Chairman of the US Federal Reserve:

- Economic activity and labor productivity are growing at a strong pace. However, market uncertainty remains high, partly due to geopolitical events. Inflation also remains high and has exceeded the established threshold for more than five years in a row. And there is no indication that the situation is improving. We expect inflation to reach 2.03% next year. Otherwise, the US economic strength is enviable. We are seeing growth and stability in most areas.

The Fed's announcement subsequently led to a decline in the US stock market, as Warsh stated that the Fed would likely raise rates in the near future. This marked the beginning of market panic. Investors were confident that a rate hike would occur, and had already factored changes into their contracts to account for a one-time increase and a subsequent maintenance of that level. Now, however, financiers are concerned about rising borrowing costs and a slowdown in US economic growth.

ECB: HIGH INFLATION SINCE 2023

Europe, which, like Japan, relies on energy imports, also raised its interest rate for the second time this year due to inflation. In early September, the rate rose to 2.5%, with inflation at 3.03%. The ECB notes that the current price hike is largely due to the energy shock. However, experts fear that fuel prices will continue to rise as the bloc competes with Asian countries for scarce hydrocarbon supplies from the Middle East.

Source: https://24.kz/ru/news/in-the-world/793158-klyuchevuyu-stavku-vnov-povysili-v-yaponii