The Bank of Japan stopped raising interest rates and maintained the interest rate at 0.25%!
1. At the monetary policy meeting held today, the Bank of Japan Policy Committee unanimously decided to formulate the following guidelines for money market operations during the meeting period:
Bank of Japan to encourage unsecured overnight lending rate to remain around 0.25%
2. Japan's economy is recovering modestly, although there are some signs of weakness in some areas. The overseas economy as a whole is growing modestly. Exports and industrial production are basically flat. Against the backdrop of improved corporate profits, corporate fixed asset investment is showing a moderate growth trend. Employment and income conditions have improved. Private consumption has maintained a moderate growth trend despite factors such as price increases. Residential investment is relatively weak, and public investment is basically flat. The financial environment remains loose. In terms of prices, the year-on-year increase in the consumer price index (CPI) excluding fresh food has recently remained between 2.5% and 3.0%. Service prices continue to rise moderately, mainly reflecting the impact of factors such as wage growth, while the transmission effect of cost increases caused by rising import prices to consumer prices is weakening. Inflation expectations are rising moderately
The Japanese economy is expected to continue to grow at a rate above the potential growth rate, and the overseas economy will maintain moderate growth, with the virtuous cycle from income to expenditure gradually strengthening, thanks to factors such as the loose financial environment. Although the impact of cost transmission to consumer prices due to rising import prices is expected to gradually fade, the year-on-year increase in CPI excluding fresh food is expected to rise by fiscal 2025 due to the gradual decline in government measures to curb CPI inflation. At the same time, as the output gap improves and the virtuous cycle between wages and prices further intensifies, medium- and long-term inflation expectations are expected to rise, and basic CPI inflation is expected to gradually increase. In the second half of the forecast period of the "Economic Activity and Price Outlook" in July 2024, the CPI is expected to reach a level that is basically consistent with the price stability target
There remains a high degree of uncertainty regarding risks to the economic and price outlook, including trends in overseas economic activity and prices, changes in commodity prices, and wage and pricing behavior of domestic companies. Against this backdrop, it is necessary to closely monitor developments in the financial and foreign exchange markets and their impact on economic activity and prices in Japan. In particular, as companies have recently increased wages and prices, exchange rate changes are more likely to have an impact on prices than in the past.
Market Analysis
Bitcoin has broken through the resistance level and is in the process of falling back. It is expected to fall back to around 62,500. If it stabilizes, it can look up and break through the previous high position, around 65,000. The Japanese yen tonight is a relatively important news. It is recommended to pay more attention to it and consider entering the market after it lands.
Similar to yesterday when the Fed confirmed the rate cut, and then entered the market, there has been a significant increase so far
The profit and loss of left-side game is large
Take the money on the right side
Outlook
The interest rate will be cut by 100 basis points this year, and by 100 and 75 basis points in 2025 and 2026 respectively, which means that the next two and a half years will be a cycle of interest rate cuts. The worse the currency market will be during the interest rate hike cycle in 2022, the better the currency market will be in the future. Don't listen to those so-called experts who say that the market will fall in the short term. It has nothing to do with you if you don't sell. Just remember that the general trend is up. If you want to sell, wait until the BTC reaches 100,000, 150,000, or 200,000.
The price of BTC actually includes some expectations of a 50 basis point rate cut, so if it is cut by 50, the positive news will be fully realized . BTC has successfully broken through 62,500, and this increase is very reasonable. After all, the 50 basis point cut had been announced nearly a week in advance, and before the FOM meeting last night, several members directly looked at the first 75 basis point cut, which was an unexpected positive. So last night's small increase was indeed expected. In addition, Powell's speech after the interest rate meeting also dispelled market concerns about a recession. Powell did not hide anything this time. He said frankly that the economy was strong and he was confident that inflation would fall back to 2%, so he chose to cut interest rates by 50 basis points. The encouragement to the market by such remarks is self-evident. Last night's dot plot showed that the interest rate will be cut by another 50 basis points in 2024, and by 100 and 75 basis points in 2025 and 2026 respectively. This means that the market will be in a rate cut cycle for the next two and a half years. This means that good days are coming for the currency market. How miserable we are in the rate hike cycle in 2022, how happy we will be in the rate cut cycle starting in 2024. I look forward to seeing 100,000, 150,000 or even 200,000 BTC in the next one or two years
This wave of interest rate cuts has led to a general rise in the altcoin market. Even Ethereum, which has been a weak chicken recently, has rebounded against BTC . Although the ETH/BTC exchange rate has not returned to above 0.04, it has stopped falling. Vitalik has also set a ten-year goal for ETH, namely mainstream adoption and decentralized value. I personally understand that decentralized value should refer to storage value. From the fact that institutions are not very interested in ETFs, we can see that Ethereum may find it difficult to compete with BTC. Moreover, as the usage rate of Ethereum decreases, inflation is also a big problem. As for mainstream adoption, I think there is still hope, especially in combination with RWA and the popularization of DEFI. This is the biggest advantage of Ethereum compared to other competing chains. I am still very optimistic about the long-term value of ETH.
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