Japan eyes currency intervention to tame persistent inflationary pressures

The Bank of Japan is reportedly working to combat inflation by boosting the yen, a significant shift as the central bank weighs raising interest rates to counter the economy’s recent downturn. Regarding an economist on television-agreed that a stronger yen would help mitigate rising energy import costs.

In this connection, Hideo Kumano, chief economist at Dai-ichi Life Research Institute, told a programme on public broadcaster NHK that if BOJ policy were used to boost the yen by 10% to 15%, it could curb price rises across the economy as reported by the Reuters.

“While watching the impact on the economy, I think that considering things in the direction of what Mr. Kumano just mentioned could be possible as one option.” It has been observed that financial markets are pricing in roughly a 60% chance that the BOJ will raise interest rates on April 28.

Conversely, BOJ Deputy Governor Ryozo Himino clarified on Friday that the central bank will guide monetary policy with a close watch on the scale and length of the economic shock caused by the ongoing Middle East war, underscoring the need for vigilance against the risk of inflationary stagnation.