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MNI POLICY: BOJ Watching Real Estate, Bond Threat To Banks

(MNI) Tokyo
(MNI) Tokyo

The BOJ is wary that prolonged higher U.S. interest rates could prompt foreign investors to sell Japanese assets.

Bank of Japan officials have grown more concerned that financial institutions will be hit harder by slower global growth and prolonged high U.S. interest rates, a shift in focus from worries about the pace of rate hikes highlighted in October’s Financial System Report, MNI understands.

The BOJ is concerned aggressive Federal Reserve rate hikes - and the prospect of the peak rate being maintained for a long time - will slow growth next year, possibly destabilising markets, crimping investor cash flows and sparking the need for asset sales. While Japan's Financial Services Agency oversees prudential regulation, the BOJ's role is to highlight economic and financial risks to institutions.

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Bank of Japan officials have grown more concerned that financial institutions will be hit harder by slower global growth and prolonged high U.S. interest rates, a shift in focus from worries about the pace of rate hikes highlighted in October’s Financial System Report, MNI understands.

The BOJ is concerned aggressive Federal Reserve rate hikes - and the prospect of the peak rate being maintained for a long time - will slow growth next year, possibly destabilising markets, crimping investor cash flows and sparking the need for asset sales. While Japan's Financial Services Agency oversees prudential regulation, the BOJ's role is to highlight economic and financial risks to institutions.

Keep reading...Show less