Aurelia Butler

TOKYO (Reuters) – Japan’s top banks said on Tuesday they would raise interest rates on ordinary yen deposits for the first time in 17 years after the Bank of Japan ended eight years of its unorthodox negative interest rate policy.The planned hikes by the main banking arms of Mitsubishi UFJ (NYSE:MUFG) Financial Group , Sumitomo Mitsui (NYSE:SMFG) Financial Group and Mizuho Financial Group mark a key inflection point as Japan’s economy overcomes years of deflation.The BOJ on Thursday ditched its negative rate policy, where the central bank applied a -0.1% interest rate on a small pool of excess reserves parked with it by financial institutions.It set the overnight call rate as its new policy rate and decided to guide it in a range of 0-0.1% partly by paying 0.1% interest to deposits at the central bank.In response to the shift, MUFG Bank and Sumitomo Mitsui Banking Corp separately said they would lift interest rates on ordinary yen deposits from 0.001% now to 0.02%, a level last seen in 2016.Both would be the first such increases since February 2007.Mizuho and No. 4 banking group Resona Holdings also said they planned to raise interest rates on ordinary deposits.The latest policy shift would help widen the spread between deposit and lending rates, boosting Japanese banks’ net interest income after years of being squeezed by rock-bottom rates.”The end to the negative rate policy is positive for the banking group’s business as it helps improve our interest income,” Masahiro Kihara, the president and CEO of Mizuho, said in a statement.”The importance of keeping deposits as a funding source of our businesses is growing bigger,” he added.Major Japanese banks raised interest rates on long-term deposits late last year after the central bank loosened its grip on long-term interest rates in October. It was their first long-term rate hike since 2011. More

LONDON (Reuters) – Global interest rates are in flux. The Bank of Japan, a holdout dove as central banks across the developed world raised borrowing costs from late 2021, finally called time on its easy money era on Tuesday.Most other big central banks, in contrast, are on the brink of victory in their fight against inflation. Rate setters in the United States, Britain, Switzerland and Norway meet this week and may at least offer clues about when they will cut rates. Here’s how big central banks stand. 1) UNITED STATES – Markets have pared back Federal Reserve rate cut bets given hawkish central bank speak and hotter than expected inflation. Traders price in roughly 75 basis points (bps) of U.S. rate cuts in 2024 versus 150 bps at the start of the year, with a first move seen as most likely in June. The Fed, which meets on March 19-20, has held rates steady at 5.25% to 5.5% since July 2023.  2) NEW ZEALAND – Reserve Bank of New Zealand deputy governor Christian Hawkesby told Reuters this month that interest rates, at a 15-year high of 5.5%, need to stay restrictive for some time. But the mood could shift before the RBNZ’s next rate decision in April. Finance minister Nicola Willis warned last week that economic growth in coming years will be “significantly slower” than previously expected. High interest rates have already dampened economic activity. 3) BRITAIN – The Bank of England is one to watch. Traders, swaps markets and positioning data broadly expect it to ease rates later than the Fed and the ECB. But economists reckon inflation could tumble rapidly as wage growth slows, prompting an early move. For now, money markets price the first BoE cut in August. Its next meeting is Thursday. 4) CANADA – The Bank of Canada’s next rate decision is due on April 10 with the central bank widely expected to keep its key overnight rate steady at a multi-decade high. Markets see the BoC cutting by around 60 bps this year with the highest chance of the first cut in July.  5) EURO ZONE The ECB kept borrowing costs at record highs this month, but took a first, small step towards lowering them, saying inflation was easing faster than it had anticipated a few months ago.Markets are pricing 84 bps of cuts this year, with a 57% probability of the first cut coming in June, an outlook some ECB policymakers appear aligned with. But the market’s expectations for euro zone rate cuts could shift based on what may happen in the United States. By cutting before the Fed, the ECB risks a bout of euro weakness that may re-stoke inflation. 6) NORWAY – Norway could be a late mover on rate cuts. Inflation numbers for February were clearly below the Norges Bank’s estimates but seen as unlikely to alter the central bank’s position on March 21.Norges Bank kept its benchmark rate unchanged at 4.50% in January and said the cost of borrowing could stay at that level “for some time ahead”.7) AUSTRALIA – The Reserve Bank of Australia held rates steady on Tuesday at a 12-year high of 4.35% but softened its stance by dropping a warning about further hikes that had appeared in previous monetary policy statements. Expectations for the first rate cut were fully priced into swaps markets for September.  8) SWEDEN – Sweden’s central bank, which left its key rate steady at 4% in February, said it might be able to bring forward the timing of a first rate cut if inflation continues to slow. The Riksbank makes its next rate decision on March 26. Economists see the first round of easing in May or June.9) SWITZERLAND – A fall in Swiss inflation to its lowest level in nearly two and half years in February has fuelled expectations that the Swiss National Bank could cut rates when it meets on Thursday. Traders anticipate the first full rate cut in June, however, according to money market pricing.  10) JAPAN -The Bank of Japan on Tuesday ended eight years of negative interest rates. As well as bringing interest rates up to a range of 0-0.1%, the BOJ also abandoned yield curve control, where it purchased vast amounts of Japanese government bonds to cap state borrowing costs. With inflation exceeding the BoJ’s target for over a year, a shift had been expected in March or April. Still, the moves were a mark of confidence from the BoJ that Japan has finally emerged from the grip of deflation.   More

CHICAGO (Reuters) – Chicagoans will vote in Tuesday’s primary election on whether to increase the tax rate on real estate transfers worth over $1 million in order to raise funds for affordable housing and fighting homelessness.The ballot measure would lower property transfer taxes for the vast majority of Chicago residents, to $3 for every $500 of a transfer price under $1 million, down from the current flat rate of $3.75. But it would create new brackets at the priciest end of the city’s property market, including many office buildings filling the Chicago skyline, with a tax rate of $10 for every $500 of the transfer price between $1 million and $1.5 million, and $15 beyond that.Proponents of the “Bring Chicago Home” measure in the City Council, led by Democrats, estimate that the changes would bring in an additional $100 million each year, which would be earmarked for services to address homelessness. The new tax structure would bring Chicago into line with San Francisco, Philadelphia and other major U.S. cities, according to Carlos Ramirez Rose, the alderman who represents Chicago’s 35th ward.”This is not a big scary change,” he said. “A lot of the fear-mongering and misinformation have been coming from some of the richest entities in the world.”About 93% of all home purchases in Chicago are for under $1 million and would see a lower tax bill, the council said. Some landlords and managers of more expensive properties oppose the measure. The Building Owners and Managers Association of Chicago says it would hinder efforts to revitalize office towers downtown, which have struggled to keep tenants in the wake of the COVID-19 pandemic.As in other American cities, many non-wealthy Chicago residents must contend with rising rents and home prices. Illinois law requires that the council put any property tax changes to voters before they can be enacted.More than 68,000 Chicagoans were without permanent housing at some point in 2021, the latest year for which data was available, according to a recent report by the Chicago Coalition for the Homeless, which has advocated in favor of the tax change. More

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“I think the BOJ has caught the indications that a virtuous cycle between wages and prices has started,” Keidanren Chairman Masakazu Tokura told reporters.As widely expected, the BOJ announced on Tuesday it would end eight years of negative interest rates and other remnants of its unorthodox policy. But analysts expect it will keep rates stuck around zero for some time as a fragile economic recovery forces it to go slow on any further rise in borrowing costs.The central bank’s decision was preceded by news of stronger-than-expected pay rises by companies, raising hopes of higher household spending that would feed into more durable growth in the broader economy. “Moderate price increases are favourable for the economy as a whole, and we like the fact that the revision was conducted with the 2% price stability target in sight,” Ken Kobayashi, chairman of the Japan Chamber of Commerce and Industry, said in a statement. With inflation having exceeded the BOJ’s 2% target for well over a year, many market players had projected an end to negative interest rates either this month or next. In a sign future rate hikes will be moderate, the BOJ said that financial conditions will remain accommodative for the time being.”As businesses and individuals, we will need to gradually prepare for a world with interest rates,” Takeshi Niinami, chairman of the business lobby Keizai Doyukai who also heads brewer Suntory Holdings, said in a statement. “Full-fledged growth of the Japanese economy will not be achieved by monetary policy alone,” he added pointing to the need for companies to do more in areas such as improving productivity. More

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