Years of heavy money printing by the Bank of Japan has made the bond market dysfunctional and fiscal policy heavily dependent on cheap money offered by the bank, a former BOJ deputy governor said, warning against expanding monetary stimulus further.
Toshiro Muto, who retains strong influence among policymakers, also said it would be hard for Japan to intervene in the currency market to stem yen gains unless the currency strengthens well below 100 to the dollar.
The yen stood around 104 to the dollar on Wednesday.
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Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.
His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.
Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.