Rating agency Fitch downgrades Japan’s rating outlook from “stable” to “negative”
The rating agency Fitch maintained Japan’s “A” level unchanged, but lowered its rating outlook from “stable” to “negative”, which means there is a chance to downgrade the rating. Because the Japanese government is trying to curb the new crown virus epidemic, the future fiscal deficit and public debt will increase substantially. In addition, Fitch expects that Japan’s GDP will shrink by 5% year-on-year in 2020, and will rebound to an increase of 3.2% by 2021, and it may not be possible until the end of 2021 to return to the pre-epidemic level at the earliest. . Affected by the epidemic and the Sino-U.S. dispute, the local economy continues to weaken. If the yen’s appreciation factor is added, it can be regarded as worse. It is no wonder that the Bank of Japan Vice President Masakah Amamiya said on Wednesday that if the central bank further eases monetary policy, it will not rule out the possibility of further lowering negative interest rates. This move may help suppress the inflow of funds into the yen for safe-haven purposes.
U.S. Federal Reserve keeps interest rates unchanged
After the interest rate meeting, the US Federal Reserve announced to maintain interest rates unchanged, in line with market expectations. The statement after the meeting pointed out that economic activity and employment in the United States have increased in recent months, but still far below the level at the beginning of the year. It is also expected that the epidemic will severely affect economic activities, employment and inflation prospects in the short term, and pose considerable risks to the medium-term prospects. The bureau believes that the economic prospects largely depend on the development of the epidemic, and reiterated that interest rates will remain at the current level until the bureau is confident that the economy has overcome the epidemic. In addition, Chairman Powell even pointed out that the epidemic has dragged down inflation. Many loan programs, including small businesses and corporate bonds, may last for a longer period of time. The remarks increase the probability that the market will be optimistic about the government’s fiscal stimulus plan, and it will announce another easing of the policy as soon as September.
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