Research Update: Japan 'A+/A-1' Ratings Affirmed; Outlook Stable

We expect the impact from the Bank of Japan's (BOJ) change in monetary policy to be limited. Although ending the negative interest rate policy is a significant development, the gradual pace of the rate hike is well in line with market expectations and should not cause disorderly adjustments in the economy and financial markets. Japan's diversified and wealthy economy as well as the free-floating yen's reserve currency status underpin the government's credit standing. These strengths are balanced against the government's extremely high debt burden, entrenched fiscal deficits, and rising funding costs. We affirmed our 'A+' long-term and 'A-1' short-term sovereign credit ratings on Japan. The stable outlook reflects our view that, despite the negative effects of higher interest rates, Japan

...- We expect the impact from the Bank of Japan's (BOJ) change in monetary policy to be limited. Although ending the negative interest rate policy is a significant development, the gradual pace of the rate hike is well in line with market expectations and should not cause disorderly adjustments in the economy and financial markets. - Japan's diversified and wealthy economy as well as the free-floating yen's reserve currency status underpin the government's credit standing. These strengths are balanced against the government's extremely high debt burden, entrenched fiscal deficits, and rising funding costs. - We affirmed our 'A+' long-term and 'A-1' short-term sovereign credit ratings on Japan. - The stable outlook reflects our view that, despite the negative effects of higher interest rates, Japan will maintain real per capita GDP growth at levels comparable with other high-income economies over the next three to five years....

Research Update