Federal Reserve Chair Jerome Powell¡¯s stern message at Jackson Hole has made it clear for Bank of Japan Gov. Haruhiko Kuroda that the weaker yen, a major source of concern for Japan¡¯s economy, won¡¯t be going away anytime soon.
The yen fell to a five-week low Monday morning, after Powell warned against prematurely loosening policy in his speech at the Federal Reserve Bank of Kansas City¡¯s Jackson Hole, Wyoming, retreat Friday. With other key central bankers, Powell emphasized his strong resolve to fight inflation, while Kuroda made it clear he¡¯s sticking with monetary easing.
The remarks increased selling pressure on the yen, with more expectations for a wider interest rate differential between Japan and the United States to continue for longer. The development reversed a budding market view in the past few weeks that a slowdown in the pace of U.S. rate hikes would stop the yen¡¯s weakening trend.
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