https://www.bbc.com/news/articles/c2dz11pykwnoThis article summarizes the recent increase in Japan’s interest rate as there has been an increase in inflation. This increase in the interest rate by 0.25% is a significant increase from 0.5% up to 0.75%. This is the highest the rate has been since 1995 because of increased inflation and the weakening of the Japanese yen when in relation to other first world countries currencies. The prime minister had previously made statements regarding a negative sentiment about a rate increase however she has stated decreasing the inflation rate is a top priority for the country and puts her trust in the economic staff.
This could have significant impacts for the country and the region because this increase in rate also increases the cost of borrowing for the government, this means that Japan must be more cognizant of their actions and how they plan their fiscal actions in the near future in order to not fall into any significant debt. This impacts the region because it creates a weird period where the yen should slowly increase in value and stability but they will still be weak when exporting and importing goods. However over time this should improve and allow international trade with Japan to become more prosperous.
The primary stakeholder is obviously Japan as this was an internal action though it does have some international impacts regarding trade and how willing they are to borrow and loan. The primary way for Japan to respond is to keep a close eye on the stability and strength of the yen in order to see if the rate increase has corrected it. Hopefully, this increase will be the only one necessary although many economists have voiced a prediction that Japan will see the rate raised to 1% which would make it doubled in 2 years.
This connects to the legitimacy of the government and legitimacy as a topic. The economic conditions can have a significant impact on the view of the legitimacy of the government by the Japanese citizens because if the government is not able to stabilize the economy which allows the people to have increased quality of life and faith in the government that it is able to protect them and their liberties. Additionally, this does have a connection with interdependence because part of the reason that Japan has seen this problem with the yen being very weak during trade because it does not have the same strength when compared to the countries they frequently trade with,