Leaders | Debt, Japanese style

Japan’s bond-market peg could snap

Financial danger is brewing in the last bastion of low interest rates

Mandatory Credit: Photo by FRANCK ROBICHON/EPA-EFE/Shutterstock (13482171d)A dealer works as displays show the exchange rate between the Japanese yen and the US dollar at a foreign exchange trading company in Tokyo, Japan, 21 October 2022. The yen continues its fall against the US dollar, hitting a 32-year low, to remain in the 150 range.Japanese Yen in the 150 range against the US dollar, Tokyo, Japan - 21 Oct 2022

Nov 3rd 2022

Until inflation subsides, central bankers will keep turning the screws on the global economy. On November 2nd the Federal Reserve raised interest rates by 0.75 percentage points for the fourth consecutive time, six days after the European Central Bank made the same move. As we published this leader, the Bank of England was poised to raise rates by a similar amount. Grim news on inflation keeps dashing hopes of a reprieve from higher rates. The latest nasty surprise came from the euro zone, where prices in the year to October rose by a record 10.7%.

This article appeared in the Leaders section of the print edition under the headline “Japanese turning”