By normalizing monetary policy quickly, the BoJ risks repeating the mistakes of the early 2000s: choking off inflation before it is truly self-sustaining. If I am right, the BoJ's scope for raising interest rates will remain extremely limited.

If wage pressures disappear and inflation loses momentum, rate hikes will soon be a thing of the past. That's why I agree with the market on the current strength of the Yen. This is because I think it correctly prices in the BoJ's most likely reaction. At the same time, however, I think the Yen's potential is limited. Especially in the medium to long term, I do not expect the Yen to strengthen too much. That is because I do not think there is room for a pronounced normalization of interest rates.