Bank of Japan likely to reverse its five year old policy and raise interest would have a rippling effect across Asian financial markets. Loan credit rates across much of Asia are likely to be impacted and this will subdue growth targets of growing economies.



Central banks around the globe continue to closely monitor developments as the Bank of Japan board meets on July 13-14 to chalk out its strategy. Analysts expect that the bank will raise interest rates by 25-basis point. Japan has been following a zero rate interest policy since 2001.



The Japanese economy is slowly emerging after having been in recession for over a decade. Raising of interest rates is bound to impact Japanese fund flows into emerging markets. This coupled with American Federal Bank’s policy of raising interest rates to check inflation has already sucked out a lot of liquidity from the markets.



With crude oil on the boil, the fresh Middle East crisis threatening to escalate, Iran’s nuclear stance unsettled and the North Korea defying international pressure and threatening to test fire inter-continental missiles again, implications for the global economy are turning negative.



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