Currency Wars! BOJ reignites debate, says expect more rounds!
Currency wars are making headlines again with the Bank of Japan’s decision to double its inflation target to 2% while committing to open-ended asset purchases next year. The news comes as Japanese Prime Minister Shinzo Abe has been pressuring the central bank to devalue the yen.
Bloomberg reports this move is the BOJ’s strongest commitment yet to end two decades of stagnation. The yen rose after the announcement, signaling that some investors were disappointed with the BOJ’s decision.
Bundesbank head Jens Weidmann is the latest policymaker to warn of a brewing currency war, according to Reuters. He joins Russian Central Banker Alexei Ulyakeyev and St. Louis Fed President James Bullard, who have both accused Tokyo of monetary protectionism and raising the specter of “beggar thy neighbor” policies.