Friday☕️

Time Is Money

Sep 6, 2024 • 5 min read

Trending:

Bank Of Canada Interest Rates
Japan‘s Housing Market

Yesterday’s U.S. stock market:

Yesterday’s commodity market:

Yesterday’s crypto market:

Bank Of Canada Interest Rates:

The Bank of Canada recently cut its interest rate to 4.25%, marking its third reduction in a row. This move was largely driven by a slowdown in economic activity and easing inflation, which is now down to 2.5%. While the cuts were expected, the central bank remains cautious about the future. Governor Tiff Macklem (of the bank) has emphasized that if inflationary pressures re-emerge or the economy weakens further, they may adjust the pace of cuts to ensure stability. The bank’s primary goal is to bring inflation closer to its 2% target while fostering stronger economic growth.
In the United States, the Federal Reserve has held interest rates between 5.25% and 5.5% throughout much of 2024, as it seeks to manage inflation, which peaked in 2022. Inflation has since cooled, standing at about 2.9% as of August 2024. Despite the progress, the Fed remains cautious about lowering rates too soon, with concerns that inflation could reignite. The Fed’s policy is centered on maintaining steady growth while keeping inflation in check, balancing employment levels and the housing market as key indicators of the broader economic health.
Japan, meanwhile, continues with its unique economic strategy, maintaining its key interest rate at -0.1%. Inflation in Japan has historically been low, but it has crept up to around 3% in 2024. The Bank of Japan has stuck to its policy of ultra-low rates in an effort to boost economic growth and ward off deflation, a challenge that has haunted its economy for decades. Despite inflationary pressures rising slightly, the central bank is more focused on stimulating spending and growth.
China’s economy has faced its own challenges, with inflation dropping to a very low rate of 0.3% in 2024. The People’s Bank of China has responded by cutting its key lending rate to 3.45% in an attempt to spur economic activity amidst slowing domestic demand and a broader economic slowdown. China’s central bank is focused on stabilizing growth, using interest rate cuts to encourage borrowing and investment. These different approaches across the world’s largest economies highlight the diverse challenges each country faces in balancing inflation control and economic stability.

Japan‘s Housing Market:

Japan is currently dealing with a significant issue of vacant homes, known as Akiya, which have reached around 9 million properties, making up nearly 14% of the housing market. Most of these homes are in rural areas, where populations have been declining for years as younger people move to cities like Tokyo for job opportunities. The problem is further exacerbated by the fact that many of these homes are old and expensive to renovate, making it hard for sellers to find buyers. This growing number of vacant homes is expected to continue increasing in the coming years as the population shrinks.
A key driver behind this is Japan’s declining birth rate, which has fallen to historically low levels. In 2023, Japan recorded fewer than 730,000 births, the lowest in over a century. The birth rate has now dropped to 1.2 children per woman, far below the 2.1 needed to maintain population levels. Many young couples in Japan choose to have fewer children due to the high costs of living in cities, stagnant wages, and difficulties balancing work with family life. Despite government efforts to boost the birth rate by offering financial incentives and family support programs, the trend has not reversed.
This population decline has broader consequences beyond empty homes. Japan’s aging society means that fewer young people are entering the workforce, which strains the economy and social services. Over 20% of Japan’s population is now over 70 years old, placing immense pressure on the healthcare system and retirement programs. The shrinking workforce also affects economic productivity, making it more difficult for the country to sustain growth and innovation.
To address these problems, Japan has started experimenting with ways to attract people to rural areas, such as offering abandoned homes at low prices or even for free. While some regions have successfully brought in new residents, including foreign buyers, these efforts alone may not be enough. The root issues of a low birth rate and an aging population need to be addressed to reverse the decline and ensure Japan’s smaller towns and villages do not become completely deserted.

Statistic: