The Bank of Japan raised interest rates to 1%. One percent. The kind of number your savings account pretended to pay in 2007. The kind of number that sounds like a rounding error on a Wendy's receipt. But economists are treating this like the financial equivalent of breaking the sound barrier because Japan hasn't seen rates this high since 1995, back when people thought the internet was a fad and Michael Jordan was still retiring for the first time.
The BOJ's last hike was in December when they pushed rates to 0.75%. Four months later they found another quarter point under the couch cushions. At this pace they'll hit 2% sometime around the heat death of the universe.
The justification is yen weakness and inflation worries. Translation: the currency is doing what currencies do and prices went up like prices always do, so central bankers needed to look busy. They could have done nothing. The chart wouldn't care. The yen would still be the yen. Inflation would still be whatever it was going to be anyway. But that's not how the game works.
Retail traders are now convinced this changes everything. They're redrawing their support lines. Recalculating their Fibonacci sequences. Updating their Excel sheets with new correlation coefficients between the yen and crude oil and the S&P 500 and their neighbor's cat's mood. They think 1% means something because it's the highest number since Clinton's first term. They'll trade on this information. They'll lose money on this information. Then they'll wait for the next headline to tell them what to think.
The Bank of Japan meets again in a few months. Maybe they'll hike another quarter point. Maybe they won't. Your trading account will perform identically either way, but at least you'll have a reason to blame someone in Tokyo instead of yourself.
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