Behind the Headlines: March 2007

Article Excerpt

Japan’s Nikkei 225 stock market index is now trading at 17,454, a level not seen since 2000. That’s despite the recent setback on global stock markets. The index bottomed out at around 8,000 in May, 2003, rose to 11,000 by the end of 2003, and then moved sideways until it started rising in mid-2005. The Bank of Japan recently raised interest rates for only the second time in six years, to 0.5% from 0.25%. Rates are now at the highest level in more than 10 years. Japanese interest rates fell during the 1990s, and hit zero in early 1999. That was in response to a stagnant economy and deflation. The recent rate hike follows gains in production, income and corporate spending. The Japanese economy grew at a strong rate of 4.8% in the fourth quarter of 2006. Consumer spending rose 4.5%, rebounding from a weak period in the middle of last year. Japan’s $5 trillion economy is the world’s second largest, after the…

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