This month, the Bank of Japan raised its key interest rate for the first time in 2025. Hideo Kumano, chief economist at Dai-ichi Life Research Institute, explained that the move carries significant costs.
“The BOJ's rate hike will raise mortgage burdens for households, weigh on private investment, and increase the government's debt interest costs,” Kumano told CMG in a recent interview.
Higher policy rates flow through to variable-rate mortgages, meaning many families will see their monthly repayments climb, squeezing disposable income. For private companies, more expensive loans could prompt delays or cutbacks on new investments, potentially slowing economic growth.
Meanwhile, Japan's already high public debt faces steeper servicing costs, challenging fiscal plans and putting pressure on future budgets.
Kumano argues that balancing the need for tighter monetary policy with targeted support for borrowers and businesses will be key. As Japan navigates this shift, households and investors are watching closely to see how these changes unfold in the months ahead.
Reference(s):
BOJ rate hikes to weigh on mortgages and investment: Japanese expert
cgtn.com
