BOJ's Rate Hike Likely to Affect Households, Firms

Economy

Tokyo, Jan. 24 (Jiji Press)--The Bank of Japan's decision on Friday to raise interest rates further is expected to affect household and corporate finances.

While the central bank's move is expected to bring positive effects such as higher deposit rates, it also means higher housing and corporate loan rates.

If the 10-year Japanese government bond yield rises to about 1.25 pct following the BOJ's rate increase, there will be a positive impact of about 600 billion yen per year on households overall, mainly due to increased income from financial assets, according to an estimate by Mizuho Research & Technologies Inc.

Only looking at households with large debts, however, the negative effects will outweigh the positives, with the average annual financial burden per household increasing by 15,000 yen.

Young people who are building assets and repaying housing loans will be hit hard in particular, with the burden increasing by 43,000 yen on average per year for those aged 29 or younger.

[Copyright The Jiji Press, Ltd.]

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