BOJ policymaker Tamura says important for FX to move in a way reflecting fundamentals
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FX rates movement is not just driven by policy stance of central banks, but also other factors FX moves are an important factor affecting Japan's economy, prices Japan has already achieved 2% inflation target Must now raise rates near neutral to avoid underlying inflation from ov
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4 itemsBoJ Tamura says neutral rate around 2% and its important to get closer sooner
BOJ policymaker Masu warns that yen depreciation may raise inflation expectations
The desk views the recent commentary from BOJ policymaker Masu as a critical signal regarding the potential for yen depreciation to elevate inflation expectations in Japan. Per the full note [source], Masu highlighted the risks associated with rising inflation expectations that could stem from a weaker yen, emphasizing the need for the BOJ to maintain a vigilant policy stance. This aligns with our assessment that the BOJ may need to adjust its policy rate in response to evolving economic conditions, particularly as Japan grapples with inflationary pressures that have emerged more prominently than in previous decades. Current market sentiment reflects a cautious approach, with traders anticipating potential policy shifts in the near term.