Japan is in the middle of a “big monetary experiment,” from which market volatility should be expected, the Bank of England’s Ben Broadbent told CNBC on Thursday.
“Japan, of course, is in the midst of what amounts to a big monetary experiment, so I think we should see the volatility in equity markets and indeed in bond markets in that context,” said Broadbent, who is a member of the Bank of England’s Monetary Policy Committee.
His comments came after the Japanese Nikkei plummeted 7 percent on Thursday on strength in the yen, a spike in Japanese government bond yields and new evidence of weakness in China’s economy.
The yen holds an inverse correlation with the Nikkei as strength in the currency is seen as negative for the market that has a heavy concentration of exporters.
Markets were also rattled by Wednesday’s comments by Federal Reserve chief Ben Bernanke. U.S. stocks fell nearly 1 percent at the close on Wednesday after Bernanke’s testimony to the U.S. Senate on Wednesday, and the publication of minutes from the Fed’s last policy meeting.
However, Broadbent described Bernanke’s speech as “unsurprising.”