BOJ policymaker Tamura says important for FX to move in a way reflecting fundamentals
- 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 overshooting above target
- BOJ needs to gauge where neutral rate lies by assessing the impact of each rate hike
- If risk of inflation overshoot materialises, we may need to accelerate pace of rate hikes
- Whether that means once every 3 or 4 months would depend on how economy, markets respond to each rate hike
More to come..
This article was written by Justin Low at investinglive.com.