News
Japan Increases Interest Rates for the First Time in Nearly Two Decades
Japan’s central bank made an unprecedented move on Tuesday by raising interest rates for the first time in 17 years. This decision marks a significant shift in the country’s monetary policy, as the Bank of Japan has kept interest rates at near-zero levels since 2007 in an effort to stimulate the economy.
The decision to raise interest rates comes as Japan’s economy has shown signs of stronger growth in recent years. Inflation has picked up after being low for an extended period, and there have been notable increases in wages. These developments indicate that the economy may be on a path to more sustained growth, prompting the central bank to tighten its interest rate policy.
Despite the increase, Japan’s interest rates are still relatively low compared to those of other major developed economies. The Bank of Japan’s target policy rate was raised to a range of zero to 0.1 percent from minus 0.1 percent. This move is a measured step towards normalizing monetary policy in Japan and reflects the confidence in the country’s economic progress.
The Bank of Japan stated that the economy is in a “virtuous cycle” between wages and prices, demonstrating that wages are rising enough to cover increasing prices without cutting into business profits. With the main inflation reading at 2.2 percent in January, the central bank deemed it appropriate to raise interest rates and phase out other stimulative policies.
The recent rise in wages is a crucial indicator for policymakers, signaling that the economy is strong enough to generate inflation and withstand higher interest rates. This shift in the economic landscape has been welcomed by investors, who view it as a positive step in Japan’s recovery.
The decision to raise interest rates was influenced by various factors, including wage growth, inflation, and overall economic performance. Moving forward, the Bank of Japan plans to make a gradual shift in policy to ensure that growth is not stifled by high interest rates.
This move by the Bank of Japan has garnered attention from investors and economists worldwide, as it marks a milestone in the country’s economic trajectory. The decision reflects a shift towards a more optimistic outlook for Japan’s economy and its ability to weather future challenges.
In conclusion, Japan’s decision to raise interest rates after 17 years is a significant development that signals the country’s economic revival. The move represents a confidence in the economy’s ability to sustain growth and adapt to changing global economic conditions.
News
Is now the right time to invest in gold as prices have cooled?
The price of gold has climbed to record highs recently and has remained strong through much of April. And, that growth continued until the precious metal traded at around $2,390 per ounce on April 19, 2024. But since, growth in the price of the precious metal has cooled, with gold’s price now hovering around $2,300 per ounce.
This lull in gold’s price may represent an investment opportunity.
In general, investing is centered around buying assets when prices are low and selling them when prices are high – generating a profit on the difference between the two. So, considering the declines in gold’s price over the past few days, now may be the time to make your investment. But is buying gold during this lull in prices really a good idea?
Compare your gold investment options among leading brokers now.
Gold prices have cooled. Should you buy in now?
With gold’s price down from recent highs, you may be wondering if now is the right time to buy in. There are several reasons the dip in gold’s price may represent an opportunity to buy. Here are some of the biggest:
Prices may rise again
If looking at a gold price chart shows anything for certain, it shows that changes in the overall growth of the medal come in fits and spurts. Periods of price growth are typically followed by periods of declines and vice versa.
But with inflation rising in recent months – and with gold’s reputation as a safe-haven asset that can hedge against inflation – it only makes sense that the price of the precious metal will eventually start to head up again in the future. While attempting to time that directional change may be tricky, buying the precious metal while the price is down gives you the opportunity to take advantage of any upward movement that may be ahead.
Add gold to your portfolio now before prices have a chance to rise.
You may be able to make a quick profit
Gold isn’t known as an asset in which you can earn a quick return, but in today’s market, that may be the case. Don’t forget that in January, gold was trading at just $2,000 per ounce. And, by mid-April, the commodity’s price had climbed to around $2,400 per ounce. That’s about 20% growth in a matter of months, much of which happened since March 1 – an impressive climb for any investment asset.
Perhaps more importantly, gold’s price growth through the beginning of 2024 shows that the commodity doesn’t have to be a buy and hold style investment that you keep in a safety deposit box or precious metal depository for years to come. There’s also the possibility that the commodity’s price could climb further ahead, making it a compelling way to potentially generate a quick profit.
There are other benefits of investing in gold
There are other benefits of investing in gold that have little to do with the price growth seen thus far in 2024 – or the lull in prices seen over the past couple of days. Those benefits include:
- Inflation protection: Gold has long been considered an inflation hedge, and for good reason. When inflation drives the prices of consumer goods and services up – and the value of the dollar down – gold’s price tends to rise. So, it could be used to maintain the value of your portfolio during inflationary economic conditions. That’s important in today’s economic environment as stubborn inflation continues to weigh on the value of the dollar.
- Portfolio diversification: Gold’s price doesn’t always move in the same pattern that bonds or stocks do. So, mixing a reasonable amount of gold into your portfolio (up to 10% of your portfolio assets) as a diversifier could protect you from losses should one or more of your traditional portfolio assets fall in value. “If you have less than 5% – 10% of your net worth in commodities & FX (forex), you should absolutely consider adding exposure to gold and other precious metals,” says Vijay Marolia, money manager and managing partner at the wealth management firm, Regal Point Capital.
The bottom line
Gold’s price has fallen from recent highs – which may represent an opportunity to tap into growth ahead. However, gold isn’t simply a “buy while it’s low and sell while it’s a high” kind of investment opportunity. The commodity can also protect your portfolio from the stubborn inflation we’ve seen thus far in 2024 while acting as a diversification tool that could increase your risk-adjusted portfolio returns. So, consider adding gold to your portfolio today while it has the potential to grow in value.
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