Tokyo Market Rout — Oops, the BOJ Did It Again
Japan’s central bank isn’t responsible for the bloodbath. But it’s reliving a terrible habit of hiking rates at the worst possible time.
Tokyo rule: Rates go up, markets go thud.
Photographer: Noriko Hayashi/BloombergThe Sahm Rule might be a good indicator of a recession. But the timing of when the Bank of Japan unnecessarily hikes interest rates might be even better.
Until the events of recent days, Bank of Japan Governor Kazuo Ueda had earned plaudits for unwinding the massive stimulus policies of his predecessor without spooking the markets. That praise now looks premature. In stark contrast to March, when the Nikkei 225 Stock Average tested new all-time highs as Ueda eased the country out of negative interest rates, his second hike July 31 has been followed by a market bloodbath of almost unprecedented levels.