It is expected that Kazuo Ueda will end the negative interest rate and YCC policy after taking office as governor of the Bank of Japan.

(Associated Press)

[Financial Channel/Comprehensive Report] Kazuo Ueda (Kazuo Ueda) was formally nominated by the Japanese government on Tuesday (14th) as the new Governor of the Bank of Japan.

Bond traders are betting that Kazuo Ueda will further adjust the Bank of Japan's existing yield curve control (YCC) policy and end negative interest rates around the middle of this year after taking office, while stock market investors estimate that bank stocks are expected to benefit from it.

"Bloomberg" reported that Japan's 10-year bond yield has been approaching the 0.5% cap set by the Bank of Japan this month, mainly due to market speculation that Kazuo Ueda will have to adjust or abandon YCC in the face of rising inflation.

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On the other hand, the Bank of Japan's negative interest rate policy is also expected to end during Kazuo Ueda's tenure. It is predicted that it will end in July and usher in a series of short-term interest rate hikes.

According to data from the Bank for International Settlements, Japan is the only country that keeps its short-term policy interest rate below zero. The European Central Bank ended negative interest rates in July last year, and the Swiss and Danish central banks also ended in September.

In equities, banking stocks are bullish on hopes of a policy shift.

The yen has risen more than 12 percent since last October, outperforming other G10 currencies, though it was little changed after the Japanese government formally nominated Kazuo Ueda on Tuesday.

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