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2025-09-12 16:08:06
[Former Japanese Foreign Exchange Official Warns: Ultra-Low Interest Rates Exacerbate Yen Weakness and Accelerate Inflation] ⑴ Former senior Japanese foreign exchange official Toshitake Toyota stated that Japan's interest rates are too low, undoubtedly exacerbating the yen's weakness. ⑵ Toyota warned that if the current situation remains unchecked, it could accelerate inflation by pushing up import costs. ⑶ The Bank of Japan (BOJ) exited its decade-long massive stimulus policy last year and raised short-term interest rates to 0.5% in January. ⑷ Despite consumer inflation consistently exceeding the central bank's 2% target for three years, Governor Ueda pledged to slow the pace of rate hikes. ⑸ The yen plummeted to a 38-year low of 161 to the dollar last year and has remained weak for much of this year, currently trading around 147. ⑹ Toyota believes that if Japan gradually tightens its monetary policy and narrows the interest rate gap with the United States, the yen's weakness will be corrected. ⑺ From a historical perspective, the yen remains too weak and there is no reason not to strengthen significantly. ⑻ He recalled the public protests sparked by the yen's surge following the Plaza Accord in 1985, noting that Japan should have embraced the yen's appreciation and used it to reduce its reliance on exports. ⑼ Regarding the export industry's cautious attitude toward a stronger yen, Toshitake Toyota noted that this sentiment is "very different from the past."
