The Bank of Japan increased interest rates last week on Wednesday (July 31, 2024) causing a sharp drop in Japanese stock indices and disruption in global markets.
This was the first interest rate hike by the Japanese Central Bank in 17 years, with the last one occurring in 2007.
The BoJ raised its short-term policy rate from -0.1 percent to a range between 0 and 0.1 percent.
Due to this hike in interest rate, International markets on Monday (5 August, 2024) faced one of their biggest declines.
Where Japanese markets plunged by as much as 12 percent, their largest drop since 1987, driven by fears of an end to ‘carry trade’.
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