Market turmoil, Fed issue prompts BOJ to keep rates

In Tokyo, the Bank of Japan’s Governor Masaaki Shirakawa may expect to come face to face and be put under close scrutiny last Wednesday because investors will then look for some clues when it comes to the chances of being able to get an eventual rate cut. At the same time, the markets will then remain right on the edge right after the unfortunate collapse of Lehman Brothers.

Expectations of Japanese Banking Industry

Then again, right after the Federal Reserve ends up holding the United States interest rates at a steady pace, some market players will then be able to expect the central bank of Japan to actually be able to follow suit and maintain the rates at a steady value of 0.5 percent right when the rate-setting meeting comes to an end sometime during the day. The BOJ has since then decided to adopt a more neutral stance regarding the monetary policy. They say that they had decided to do this because it has to be quite focused on the pitfalls and some of the risks that may be an example of a slow global growth and also some high energy costs and their inflationary risks as well. When the central bank also stressed that the Japanese monetary policy has already become accommodative, these market players had been able to expect that the succeeding move of BOJ would be to come up with a rake hike instead of pushing for a rate cut.

Some Caution Involved in these Views

However, these views will then be stirred up in the current week right after the Lehman Brothers had unfortunately filed for a case of bankruptcy protection, along with the spotlight now facing on the worldwide insurer American International Group. Yasuhiro Onakado, the chief economist who is at Daiwa SB Investments, also say that it can be quite hard to predict the future especially if the situation is already as it is now. There is, of course, a hurdle which should be undertaken when the cutting rates are at a high. While these markets will need to factor in the very slight possibility of a rate cut, such is seen as still far ahead into the future. It can actually be quite hard to come up with a factor that will prompt the movement of a rate rise or a rate cut at the very moment, considering the situation that the market is at right now. The BOJ of course will end up finishing its two day meeting and eventually announce the rate decision it has made some time between twelve noon and two pm on a Wednesday. Shirikawa also expects to hold an embargoed news conference and will probably release his comments a bit late in the afternoon.