The Bank of Japan needs to raise interest rates to prevent excess borrowing that helped trigger the U.S. subprime mortgage crisis and subsequent financial-market turmoil, central bank Policy Board member Atsushi Mizuno said Thursday.
“Overinvestment amid conditions of ample global liquidity was a major factor in causing the subprime issue,” Mizuno said in a speech in Kofu, Yamanashi Prefecture. The market turmoil “is proof that keeping rates at levels that stray from fundamentals may actually cause instability.”
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