Japan's central bank (BoJ) wants to raise rates to fight inflation, but the government fears an economic downturn. Weak domestic spending further complicates things. The BoJ might delay hikes until late 2025, focusing on building consensus on a "neutral" interest rate to stabilize the Yen. The government may need to cut reliance on foreign exchange interventions and potentially reconsider its economic policies. This tug-of-war creates uncertainty and weakens the Yen. Consensus on rates is key for a stable Japan.

Yen on the Brink: Can Japan Navigate Its Monetary Policy Challenges?

May 15 2024

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