BoJ Needs Drastic Policy Shift for Lasting Yen Move, Experts Warn

Experts are calling for a major policy change from the Bank of Japan (BoJ) to effectively strengthen the yen. Robin Brooks argues that currency intervention must be paired with a substantial change in BoJ policy. He notes that recent U.S. and Japanese interventions have not meaningfully slowed yen depreciation.

In order for the yen to strengthen, Brooks believes that the BoJ needs to reduce its purchases of Japanese government bonds (JGBs). This would allow long-term yields to rise, which he sees as a key factor in achieving lasting currency intervention results. He previously stated that a small rate hike is not meaningful and critiqued the Fed's July rate hike anticipation due to weak payroll and inflation data.