Interview: Ex-BOJ-Chef Kuroda sagt, dass der Leitzins auf etwa 1,5 % angehoben werden sollte

Economics is not my strong suit, but this seems like a highly risky proposal given the current oil crisis. Oil supply drop will lead to supply side inflation, i.e. people paying more for almost everything, and the interest hike would spur demand side inflation, i.e. people buying less because borrowing is more difficult. Households get squeezed on both ends, higher goods, higher mortgages.

The only clear winners are banks themselves (so perhaps little surprise this is his recommendation). Might also benefit people with strong savings and investments (elderly and more well-off). If the Yen strengthens, imports might get a little cheaper and its good for some foreign investment.

But, most working families, especially those with variable-rate mortages, will get hit, as will small and medium enterprises that depend on loans to weather downturns (could see a wave of bankrupt zombie firms), and exporters will feel the pinch.

Overall, a policy that would tend to benefit the elderly and the financial sector, and hurt the young and small businesses. However, the reason its being done is to combat a weak Yen and non-stop inflation, in other words, short-term pain that offers (possible) greater long-term stability (that is ‚economic‘ stability, there might be increased social instability from the effects felt by those pushed into poverty). The alternative, in a game with no perfect moves, is to continue fiscal support in a system that can’t really afford it. I can’t say I like his suggestion, but I also can’t say its wrong. Then again, as I said before, economics is not really my field.