What's going on?

The Bank of Japan (BoJ) and the Bank of England (BoE) both left their respective countries� interest rates where they were on Thursday � but each of them is staring down completely different economic problems.

What does this mean?

Japan�s key interest rate is currently negative: its central bank�s been trying to boost stubbornly low inflation in the country for six years now, without much success. Further rate cuts are a potential solution, but they�d come at a cost to the country�s banks, whose earnings fall when rates are lowered.


The UK�s main interest rate is the right way up at 0.75%. But it�s also in a holding pattern � thanks to, you guessed it, Brexit. If the current uncertainty about if, when, and how the UK will leave the European Union continues to weigh on Britain�s economy, the BoE reckons a rate cut is likely to follow.

Why should I care?

For markets: Any exports in a storm.

The BoJ is probably hoping a recent consumption tax hike won�t hamper Japan�s economy too much and will instead spur inflation. But with global growth sliding toward Hades and a strong yen making Japanese products appear more expensive to foreign buyers, there�s not been as much demand as hoped for the country�s exports. If there�s no improvement, the BoJ may cut rates next month anyway � or temporarily abandon its inflation target, as it considered doing last year.

The bigger picture: Brexit could send rates either way.

The BoE�s likely to gradually raise British interest rates in the event of a minimally disruptive Brexit, as it expects renewed certainty to drive up demand. But it�s likely to cut them if the UK unexpectedly leaves the European Union without a deal in place, given that it�d probably (at least initially) make cross-border trade trickier and more expensive. In the meantime � and as the BoE expected � the UK economy is languishing: new data on Thursday showed retail sales dropped unexpectedly last month.