The Japanese Yen jumped on expectations that the Bank of Japan (BoJ) could potentially unwind its ultra-loose monetary policy. In the view of economists at Commerzbank, it might be a tragic mistake if the BoJ were to change its approach now.

Considerable logic in a continuation of the expansionary monetary policy

“At a time when the inflation trend seems to reverse in other economies, it might be a tragic mistake if the BoJ were to change its approach now. If global inflation pressure eases now and if inflation in Japan eases back below the 2% target, the opportunity of sustainable inflation pressure would be lost again for another generation.”

“I see considerable logic in a continuation of the expansionary monetary policy which I am missing in the comments that only refer to current inflation levels. However, I have to admit: these considerations say very little about whether the government and the BoJ after Kuroda might not very well commit this policy error.”