Yet domestic interest rates have stayed put. As higher U.S. rates widened the gap between U.S. and Japanese government bond yields, the yen weakened 25% between March and October to touch 152 per dollar, another level not seen since the 1990s, prompting the BOJ to intervene in currency markets. At the same time, bond traders began attacking Kuroda’s yield curve control policy, which caps key sovereign rates near zero.
The situation is unsustainable, so the new governor will have to find a compromise that placates an impatient market without derailing efforts to spark a rebound from a 0.8% annualised contraction in GDP during the third quarter of 2022. That would be a trick Kuroda himself failed pull off. International comparisons do not bode well.
Nobody uses 'rue' anymore FFS! Get with the programme!
dive nose to the mud
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