The Bank of Japan’s new board member has warned that excessive moves in foreign-exchange markets pose risks for economic activity.
“It’s undesirable for foreign-exchange rates to move by not reflecting economic fundamentals,” Takako Masai, the board member who officially joined the bank Thursday, said at her inaugural news conference in Tokyo. “Excessive moves will raise risks of pausing various activities for investment.”
Masai will cast her first vote on July 29, in a policy meeting at which Societe Generale SA and JPMorgan Chase & Co. expect the central bank to expand stimulus as its 2 per cent inflation target remains distant. The yen’s strength after the Brexit vote adds risks for Japanese company profits and poses challenges for domestic investment and wage gains.
“We expect further easing in July,” Takuji Aida, chief Japan economist at Societe Generale, wrote in a report Wednesday. “Chances are growing for the yen to go beyond 100 with the Brexit,” which would cause the BOJ to cut the price view in its outlook report to be released at July’s meeting, he said.