Japan Macro Watch: BoJ on hold as widely expected

Research evidence excerpt

Japan Macro Watch: BoJ on hold as widely expected

FX Intervention: Financing the Tax Cut?

Between yesterday and today, the Japanese and U.S. authorities reportedly conducted a Large-scale coordinated FX

coordinated foreign exchange intervention. According to media reports (such as link), intervention by Japanese and U.S.

Japan carried out a large-scale yen-buying operation, causing the USDJPY rate to authorities surprised markets.

appreciate by around ¥5 from near ¥163 at one point. Subsequently, reports (such as

link) suggested that the United States also conducted a rate check.The intervention

appeared to come as somewhat of a surprise to markets, given that the Ministry of

Finance had not issued particularly strong warnings beforehand. It is considered unusual

for Japanese and U.S. authorities to intervene at the same time. If, as the media reports

suggested, the United States may have cooperated in the intervention, this could

naturally invite questions.

Treasury Secretary Bessent has long urged the Japanese government to respect the BoJ Treasury Secretary Bessent has long

independence and has also expressed openness toward further policy rate hikes. While advocated respect for BoJ

details of any communications between Japanese and U.S. authorities would be unlikely independence and expressed support

to become public, the possibility of an earlier rate hike may now warrant greater for further rate hikes.

attention.

That is not the only noteworthy development. Coincidentally, just yesterday, Prime Coincidentally, the Takaichi

Minister Takaichi announced the introduction of a reduced consumption tax rate on administration has proposed a food

food products. The government has yet to clarify how it intends to secure the roughly ¥5 VAT cut, with the Foreign Exchange