Even though the economic case for preventing the yen from sliding is much weaker, the Ministry of Finance seems to have responded with an even more forceful round of foreign exchange interventions this week than it did two years ago. Meanwhile, the Bank of Japan thinks that underlying inflation has yet to reach its 2% inflation target. But it also believes that the real stance of monetary policy is now very loose, which opens the door for multiple rate hikes even as headline inflation is set to slow sharply this year.
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