What caught my attention during the week the Bank of Japan kept interest rates unchanged [News x Investment Psychology]
What caught my attention a little this week was that the Bank of Japan did not change interest rates.
When you see news like this, your first instinct is to accept it as, "Well, things are staying as they are for now."
That was how I saw it at first, too.
Moreover, when you think carefully about the current situation, it might be natural that the Bank of Japan did not act immediately.
With the situation in the Middle East keeping concerns about rising crude oil prices alive, the outlook for prices is still a bit hard to read.
The FOMC in the United States also did not change interest rates.
Under such circumstances, I think it was difficult for the Bank of Japan to provide an immediate answer.
1. Weekend figures (3/19)
Nikkei Stock Average: 53,372 yen
TOPIX: 3,609 pt
Dollar-Yen (at 5:00 PM): around 159.22 yen
2. The atmosphere this week
With the situation in the Middle East keeping concerns about rising crude oil prices alive, the outlook for prices is still hard to read.
The FOMC in the United States also did not change interest rates, and major central banks were all giving off an air of "it's hard to act immediately."
Thinking about it that way, it might not have been strange that the Bank of Japan kept its policy interest rate at around 0.75% this week.
Prices are a concern.
But we still need to determine whether that rise is temporary or if it will continue in the future.
Furthermore, when you consider the impact on the economy and wages, it is not something that can be decided easily.
It seemed to me that such caution was evident in the Bank of Japan's decision.
However, when you look at the details, it wasn't just a "week where nothing changed."
The Bank of Japan states that while current prices have calmed down a bit due to the government's energy burden reduction measures, attention must be paid to the possibility that rising crude oil prices will push up future prices.
Moreover, there were some members who thought, "Wouldn't it be better to raise interest rates a little more?"
In other words, this week,
"Interest rates were not changed = there are no problems"
I don't think it felt like that at all.
Perhaps the market was looking at that, too.
Japanese stocks were somewhat weak, and the dollar-yen exchange rate remained at a yen-depreciated level.
On the other hand, globally, the outlook for interest rates itself became a bit harder to read due to concerns about rising crude oil prices and the situation in the Middle East.
It's not that there are no positive factors at all.
There was also resilience in the business sentiment of Japanese companies.
But this week wasn't simple enough to end with just that feeling of relief.
That is how that week looked to me.
3. What I felt
This week, I initially thought, "If prices are a concern, wouldn't it be better to raise interest rates a little more?"
Prices are high.
Crude oil is also unstable.
The yen is still depreciating.
When you hear that, you tend to think simply, "In that case, shouldn't interest rates be heading upward?"
But in reality, I don't think it's that simple.
What the Bank of Japan is looking at is not just the current high prices, butwhether it is temporary, whether it will continue in the future, whether it is linked to wage movements, and whether they can act without cooling the economy too much,I think it is all those various points.
Thinking about it that way, rather than monetary policy being something where you immediately decide to "raise" or "not raise" rates,it might be something where you make decisions little by little while watching a fragile balance.
When I look at the news, I sometimes find myself wanting to organize it with just one word.
This time, it stayed the same. So, I'm relieved.
Or, I'm concerned about prices. So, the next move might be a rate hike.
But this week, it felt like I couldn't quite lean into either of those conclusions.
Even though I want to settle things with a single conclusion right away, I can't actually do that.
I thought that frustration is probably close to the current atmosphere of the market.
4. Investment Psychology
What tends to move easily in a week like this is,the desire to quickly summarize a complex situation into a single conclusionI think.
When I hear that "interest rates didn't change," I want to feel at ease just from that.
Conversely, when I hear that "inflation is continuing," I want to quickly price in future anxieties.
Both are very natural feelings.
Because the mind feels more at ease when there is a clear conclusion.
But the market, especially at times like that, cannot be summarized in a single word.
Even if it looks calm just by looking at the numbers, the future outlook actually becomes more difficult.
Even if interest rates don't change, the meaning is heavier than I thought.
There are weeks when factors for relief and factors for anxiety don't separate cleanly.
I think that in times like these, it is importantnot to rush into "interpreting" the news too much.
Accept facts as facts.
But don't immediately summarize them into either "relief" or "anxiety" on the spot.
Leave a little bit of margin.
I feel that just by having that margin, it becomes harder for my mind to be swayed by the intensity of the news.
5. Memo to myself for next week
1. Before looking for a conclusion, look at "what has not changed"
When big news comes out, I want to think only about what comes next.
But first, I will confirm what hasn't changed yet, such as the policy interest rate itself, corporate earnings, and exchange rate levels.
2. Think about price discussions by separating "temporary increases" from "continuing increases"
Price increases that come from outside, like high crude oil prices, and price increases that spread to wages and service prices look the same but have slightly different meanings.
Even if it's the same "high prices," I will look at the contents separately.
3. Don't jump at a single word of relief, add one supplementary factor
Instead of stopping at "interest rates didn't change," I will add just one thing: crude oil, exchange rates, or corporate outlooks.
Just by doing that, the perspective changes quite a bit.
6. To everyone who has read this far
How was this week's market for you?
If there was a moment that caught your attention the most, I would be happy if you could let me know in the comments, even if it's just a word (^-^)
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