ANZ: A Joint Currency Intervention by Japan and the US Is Unlikely to Reverse the Yen's Depreciation Trend

Economists at ANZ Research have stated that the recent interventions by the Japanese and U.S. authorities to curb the depreciation of the yen are unlikely to reverse the trend of yen depreciation unless accompanied by supportive monetary policies. Japan's long-standing issues with deflation will continue to make policymakers cautious about raising interest rates, as the Bank of Japan may prioritize avoiding growth risks over allowing inflation to moderately exceed its target. They noted that geopolitical developments will be key in determining the timing of the next policy moves; if uncertainties surrounding the Middle East crisis persist, further policy normalization would be appropriate. ANZ expects the Bank of Japan to raise its policy rate in October, although the possibility of a rate hike in September is increasing.