Threadneedle comments on Japanese interest rate rise

Quentin Fitzsimmons, Threadneedle Head of Government Bonds, offers his view on the Japanese Central Bank’s decision to increase interest rates to 0.5%.

The Bank of Japan raised interest rates by 0.25% to 0.5% today. While economic data has not been particularly strong, the yen has been weak and Japan is coming under increasing pressure from western trading partners to address this. However, the fact that the economy is still in a state of modest deflation suggests to us that interest rates will not be raised beyond 0.75% this year.