Analysis has shown that the Bank of Japan‘s interest rate hike will have different effects on each generation.
Bank of Japan. Provided by Reuters Yonhap News
The Yomiuri Shimbun reported this on the 20th, citing the results of a Japanese private think tank, Mizuho Research & Technologies, analyzing the impact on households due to the Bank of Japan’s recent base interest rate increase. According to the report, it is estimated that this increase will generate an annual net profit of about 800 billion yen, or about 7.5 trillion won in Korean currency, for all Japanese households.
Based on households with two or more people, the analysis is that a positive effect of an average of 15,000 yen (about 141,000 won) per household is expected per year.
However, the pros and cons are expected to be clearly divided by age group. While the elderly in their 50s or older with a high proportion of deposited assets will benefit, the younger generation in their 40s or younger with a heavy burden of mortgage repayment is expected to be at a relative disadvantage.
Specifically, it was analyzed that households in their 50s would benefit by 8,000 yen (about 75,000 won) per year, those in their 60s by 33,000 yen (about 310,000 won), and those in their 70s or older by 41,000 yen (about 386,000 won). On the other hand, it is estimated that the burden will increase by 14,000 yen (approximately 132,000 won) per year for those in their 40s and by 27,000 yen (approximately 254,000 won) for those in their 30s.
In the aftermath of the base interest rate increase, Japanese market interest rates are already showing an upward trend. Japan’s 10-year maturity government bond yield rose to 2.02% the previous day, hitting the highest level in 26 years and 4 months since August 1999.
Commercial banks have also begun raising deposit interest rates. Mitsubishi UFJ Bank and Sumitomo Mitsui Bank announced that they would raise the interest rate on regular deposits from the current 0.2% per year to 0.3% per year from February next year. This is the highest level in about 33 years.
Previously, the Bank of Japan decided to increase the short-term policy interest rate, which serves as the base interest rate, by 0.25 percentage points from about 0.5% to about 0.75%. Accordingly, Japan’s base interest rate became the highest in about 30 years since 1995.
Reporter Seo Mid-eum faith@asiae.co.kr
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