Mitsuhiro Furusawa, a former Vice Finance Minister for International Affairs and now chairman of the Institute for International Monetary Affairs at Sumitomo Mitsui Banking Corporation, mentioned the possibility that Japan and the United States could again move to coordinated intervention to correct the historic weakness of the yen. He also said that accelerating the pace of Bank of Japan rate hikes is an option. Regarding the Japan-US coordinated intervention at the end of July, he expressed the view that the United States is wary of the impact on its own interest rates and on US Treasuries, and offered his personal view that Washington wants to avoid rising rates and market turmoil before the midterm elections. On future exchange-rate policy, he said Japan could intervene at any time without limiting itself to levels such as 160 yen or 162 yen per dollar, and that responding with coordinated intervention is fully possible. On Bank of Japan monetary policy, he supported a rate hike in September and noted that even if the policy rate reached 1.25 percent, it would be only slightly above the lower bound of the neutral rate. He indicated that if the economy does not stall, another hike could come into view in December or January, or across the fiscal year, and that ultimately he would like to see the policy rate raised to around 1.50 percent to 1.75 percent.
Sumitomo Mitsui Financial Group, Inc.Furusawa is affiliated with SMBC, and his comments on rate hikes may benefit banking sector.
Former vice finance minister suggests accelerating BOJ rate hikes, which would push yields up.
