JAPAN: Elderly to Benefit from Interest Rate Hike

TOKYO (The Japan Times), July 15, 2006: The Bank of Japan's interest rate hike Friday will likely increase interest income by about 420 billion yen, and the wealthy and elderly will benefit the most, according to a private think tank. Hideo Kumano, chief economist at Dai-ichi Life Research Institute, estimates combined Japanese households' interest income will total 556.7 billion yen per year with the July rate hike on the premise that ordinary deposit rates will be raised to 0.1 percent from 0.001 percent and time-deposit rates will be pulled up by an average 0.08 percentage point. Kumano noted that people over 50 years old will reap most of the benefits. "The elderly are usually free of loans and can enjoy the increase in interest income, while the younger generation, centering on people in their 30s, will have to pay more on their mortgages than the interest income they receive," he said. The Bank of Japan announced its decision earlier in the day to scrap its "zero-interest-rate" policy. The Japan Times (C) All rights reserved