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Bank Of Japan Raises Interest Rates To Highest Level In 17 Years

In a significant move, the Bank of Japan (BOJ) raised its key interest rate to around 0.5% from 0.25%, marking the first such hike in 17 years. This decision reflects a steady recovery in Japan’s economy, fueled by higher wages and inflation holding steady at the central bank’s target level.

Governor Kazuo Ueda confirmed the rate increase, pointing to a positive economic cycle driven by rising prices and wages, alongside an economy that’s gradually rebounding. Despite uncertainties, including global inflation and currency fluctuations, Ueda affirmed that additional hikes may be necessary if economic conditions persist.

Consumer prices in Japan have remained above the BOJ’s 2% target, with inflation reaching 2.5% for the third consecutive year, and a 3% rise in December alone. Wage growth has also contributed to the bank’s decision, with Japanese workers set to see notable pay raises in upcoming union negotiations.

Though stock markets reacted with an initial dip, the Nikkei 225 index stabilized, ending the day with minimal changes. The Japanese yen saw a slight dip against the U.S. dollar, trading at 155.41 yen per dollar.

Japan’s stance on interest rates contrasts with the approaches of the U.S. Federal Reserve and the European Central Bank, both of which have been cutting rates to manage inflation. Japan, however, remains focused on combating deflation and encouraging economic growth after years of ultra-loose monetary policies.

Analysts, such as Dilin Wu from Pepperstone, attribute this rate hike to Japan’s labor shortages and expectations of a 5% wage increase in 2025. With no aggressive trade protectionism from the U.S. under President Donald Trump, the economic environment has remained stable, supporting the BOJ’s decision to tighten its policies.

Looking ahead, the Bank of Japan expects the economy to continue growing at a robust pace in January, but it remains vigilant about factors that could affect inflation and economic activity, including global commodity prices and the domestic price-wage cycle. For fiscal year 2024, the BOJ anticipates a CPI increase of 2.5% to 3%, with inflation expected to stabilize at around 2% by fiscal year 2026.

TikTok Returns To US App Stores 

TikTok is once again available for download in the Apple and Google app stores in the US, following a delay in the enforcement of its ban by former President Donald Trump. The ban’s postponement until April 5 gives the administration additional time to evaluate the situation.

Key Developments

The decision to restore TikTok access came after Google and Apple received reassurances from the Trump administration that they would not face legal consequences for reinstating the Chinese-owned app. According to Bloomberg, US Attorney General Pam Bondi sent a letter outlining these guarantees.

In an executive order signed on January 20, Trump instructed the attorney general not to take enforcement action for 75 days, providing time for his administration to determine how to proceed.

Uncertain Future For TikTok In The US

While TikTok is back on the US app stores, its long-term survival remains uncertain. If no deal is reached by early April to address national security concerns, the app may face another shutdown. ByteDance, the parent company, has insisted that TikTok is not for sale.

Legislation And Pressure On ByteDance

The Protecting Americans from Foreign Enemy-Controlled Apps Act, which passed with bipartisan support in Congress, mandates a nationwide ban on TikTok unless ByteDance sells its US operations. This law was signed by President Joe Biden in April of last year.

In late January, the app was briefly removed from US stores following the ban’s activation, impacting over 170 million American users. However, TikTok was restored soon after, following Trump’s intervention in his first hours as president. During that time, he signed an executive order allowing 75 days for a deal that would safeguard national security. Trump also suggested that the US could take a 50% stake in TikTok, a move he believed would keep the app “in good hands.”

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