Japan raises rates to a 30-year high

The Bank of Japan raised its rates to the highest level in almost 30 years. For most of the last generation, Japan was synonymous with zero rates and deflationary policy.

The contrast is that the United States is moving in the opposite direction, with the Federal Reserve cutting rates for a second time before the new year.

For years, global markets operated with the assumption that Japan would remain anchored while the U.S. sets the tempo. Japan is raising rates because its economy is finally strong enough to handle higher borrowing costs, while the U.S. is cutting rates because growth now needs support.

Despite being nearly 6 years removed, it's a subtle reminder that the post-pandemic macro environment is still <>. Different economies are finding different solution, and assumptions about where rates "should" be are being challenged heading into the new year.