BBC - Japan ups interest rates to 0.5%

[jannyk]

Yep, that's right, UP to half a percent!

<<Japan's central bank has showed signs of confidence in the country's economy, raising interest rates to 0.5%.
It said the decision - only its second interest rate rise in more than six years - had been made because Japan's steady growth was likely to continue

The bank had last raised the rate to 0.25% percent in July last year after six years of zero interest rates designed to help the economy recover.

The bank's nine-member monetary policy board voted 8-1 in favour of the hike.

The yen immediately strengthened against the dollar on international currency markets when press reported hinted at the Bank's decision>>


http://news.bbc.co.uk/2/hi/business/6381335.stm

[youngdem]

1. How does that work? Does the public subsidize the loss?

Does anyone know how this works?

Inflation alone would make these loans money losers for the originators. Does the public subsidize the loss through tax?

The cost to service all loans plus the cost of defaults and default servicing alone would likely be over 1.5%, even in Japan, even in a good year with relatively few defaults.

Sure hope someone has some insight into how this is funded.