Japan\u2019s bank lending expanded at the fastest pace since the COVID-19 pandemic, suggesting credit is still accessible and the Bank of Japan has room to keep raising interest rates.<\/p>\n
Loans rose 6.3% in June from a year earlier, the strongest growth since August 2020, according to a BOJ report released Wednesday. The increase was driven by lending for mergers and acquisitions, real estate and economic recovery, the central bank said.<\/p>\n
The figures reinforce the BOJ\u2019s assessment that financial conditions remain accommodative even after Gov. Kazuo Ueda\u2019s board raised its benchmark interest rate last month to the highest since 1995. While the latest lending data are unlikely to reflect the impact of June\u2019s move, policymakers have repeatedly pointed to financial conditions as a key gauge when assessing whether further rate increases might be warranted.<\/p>\n
Robust loan demand suggests higher borrowing costs haven\u2019t restrained business investment or household activity, strengthening the case that the economy can withstand additional policy normalization. That\u2019s consistent with the BOJ\u2019s latest tankan survey, in which an index for financial positions among businesses improved for the first time in a year. Large firms reported that conditions for issuing commercial paper have improved.<\/p>\n
Even after the latest increase in the benchmark policy rate to 1%, Japan\u2019s real interest rate remains below zero, leaving monetary conditions broadly supportive of economic growth. A BOJ estimate has shown that inflation is well above 2% excluding transitory factors and fresh food.<\/p>\n
Japanese bank stocks have risen about 90% in the past 12 months, the second biggest winner in the Topix index. Starting in March 2024, Ueda has raised rates five times and pledged to do more in response to economic conditions and inflation.<\/p>\n
BNP Paribas economists last week raised their forecast for the terminal rate in the current tightening cycle to 2.5%, expecting the BOJ to raise rates roughly every four to five months. Economists surveyed\u00a0following June\u2019s policy meeting now see the terminal rate at 1.75%, up from 1.5% before the meeting.<\/p>\n","protected":false},"excerpt":{"rendered":"Japan\u2019s bank lending expanded at the fastest pace since the COVID-19 pandemic, suggesting credit is still accessible and…\n","protected":false},"author":2,"featured_media":539073,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[2667,72,5466,113,61,60,8672],"class_list":["post-539072","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-banks","tag-business","tag-economic-indicators","tag-economy","tag-ie","tag-ireland","tag-japanese-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/539072","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=539072"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/539072\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/539073"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=539072"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=539072"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=539072"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}