Fed Chair Kevin Warsh, speaking at Jackson Hole, hinted at further action if inflation stays elevated. The remarks accelerated yen selling in New York trading on the 28th, pushing the dollar past ¥160 for the first time since the joint Japan-US intervention in late July. On 5ch, users clashed over whether the Bank of Japan should follow with a rate hike of its own, while others countered that a hike is unrealistic given the burden of interest payments on government debt. Opinions were also split on whether the weak yen benefits export industries or simply squeezes households through higher prices — reviving the broader debate over the monetary easing pursued since Abenomics.
Federal Reserve Chair Kevin Warsh said in a speech on the 28th that if inflation remains elevated, “there is work to be done,” leaving the door open to further interest rate hikes without specifying a direction.
Following Warsh’s remarks, the yen weakened further against the dollar in New York foreign exchange trading on the 28th, briefly touching ¥160 to the dollar for the first time since the joint Japan-US intervention at the end of July. The rate had been hovering around ¥159.50 before the speech, but growing expectations that the Fed will hike rates soon fueled speculation of a widening Japan-US interest rate gap, triggering yen selling and dollar buying.
Warsh delivered the speech at the annual economic symposium in Jackson Hole, Wyoming. Past Fed chairs have used this venue to signal the future direction of monetary policy, so market watchers were paying close attention.
Source: asahi.com / Read the original article here
More likely they hold steady, or even cut 0.5%.
No way that's happening (lol)
The joint Japan-US intervention was a total waste.
Japan needs to fight back with rate hikes and tax cuts, or the country's finished.
The more you cut taxes, the weaker the yen gets.
Wasn't that intervention just to build up funds for a consumption tax cut anyway? The "weak yen is great" line isn't changing.
Do that and Japan goes bankrupt from bond interest payments.
Japan hasn't met the conditions for a rate hike.
It's not like the US, where consumer spending is holding up strong.
Consumption tax would go up too — you okay with that?
Back under the DPJ government, the strong yen crushed domestic industry, and manufacturing is still weak because of it.
With the weak yen now helping export industries like autos grow, the future actually looks a lot brighter.
I've lost count of how many rounds of this we've had, but just like China, weakening your own currency is a beggar-thy-neighbor move that's actually a net plus for the country doing it. "The US won't allow it" is just a bunch of interest groups dressing up their objections in polite language.
It's a problem that you don't get that if export industries were actually growing, the yen wouldn't be this weak in the first place lol. Just reading the comments on Yahoo News shows how off-base the average Japanese person's economic thinking is. Maybe economic education needs a bit of a boost.
They made it so the foreign exchange special account — the government fund earmarked for currency intervention — can no longer even be used for currency intervention.
What's the legal story with Takaichi and Katayama on the foreign exchange special account, anyway?
Average household income has topped $100,000 (about ¥16 million).
Service-industry workers earning close to minimum wage are making around $17/hour (about ¥2,700).
The old middle class can't cover rent and fixed costs anymore, and it's gotten to the point where people are moving out to the countryside or emigrating to Mexico.
And there's washed-up Japan, stuck fighting over food and goods with its garbage currency, the yen, against a country that just got that rich…
Japan's headed there too before long, but unlike the US, the scenario here is that the weak yen makes imports harder, leading to shortages.
Japanese salaries haven't gone up by a single yen, but
thanks to the LDP, the real value of that paycheck has been cut in half…
Plenty of companies were destroyed by the strong yen under the DPJ.
That nightmare must never be repeated.
There was no impact.
Classic double standard — companies going bankrupt from the weak yen under the LDP is somehow not a problem.
And that requires a consumption tax hike.
Let's all pull together as a nation to stop Japan's economy from collapsing.
Running monetary easing and low rates while also raising taxes seems like it works against itself, I think. Doing two completely opposite economic policies at the same time is like flooring the gas while also slamming the brake — I honestly don't get pursuing such contradictory policies at once. Just my personal take though.
From the 1997 consumption tax hike all the way to the start of Abenomics in 2013, national tax revenue never once increased. Getting the primary balance into surplus through tax hikes is nonsense.
A tax hike won't do anything about the current price increases. The reason is that today's inflation isn't demand outstripping supply — it's the interest rate gap between Japan and the US weakening the yen. If you don't fix the actual cause — the weak yen — and just raise taxes to suppress demand, all that does is make things sell less; the yen stays weak regardless. Since Japan imports its resources and raw materials, as long as the yen stays weak, prices stay high. Raising taxes to curb demand while costs are already inflated by the weak yen would just leave people struggling to get by. Just my personal take though.
I think so too — though I doubt Japan will move either.
If they don't, long-term Treasury yields are just going to tank. If Warsh gets pegged as all talk, US bonds are headed for real trouble.
https://imgur.com/Yb9xerW.png
Flip it around — the yen was overvalued for way too long after the bubble era. Its "true" level is probably more like where it was around 1970. The chart even looks like a head-and-shoulders pattern (a technical chart formation) heading into a crash.
Background and Key Points of the Debate
The Fed chair’s remarks came at the annual Jackson Hole conference, a venue long associated with signaling the future direction of monetary policy. What drew particular attention this time was that the yen fell to the ¥160 level for the first time since the joint Japan-US intervention at the end of July — a threshold the market strongly associates with past government/BOJ intervention. On the thread, opinions clashed between those calling for the BOJ to follow with a rate hike of its own and those arguing a hike is untenable given the burden of interest payments on government bonds and the state of the fiscal balance. Views were also split over whether the weak yen is a net positive — some see it as a tailwind for export industries, others see rising import costs squeezing household budgets. Whether the monetary easing since Abenomics is the main driver of the weak yen was also debated, though it’s easy to overlook that the picture is more complex than a simple good-vs-bad framing — compounding factors like the resource price spikes since 2022, Russia’s invasion of Ukraine, and the widening Japan-US rate gap from the Fed’s rapid hikes all play a role.
※This article is excerpted and summarized from the 5ch (Breaking News Plus) thread “Fed Chair: ‘There’s Work to Be Done’ If Inflation Persists — Yen Slides Past 160.”
