Japan’s target of 2 percent inflation is out of reach even as the central bank prepares to accelerate monetary stimulus, said Geoff Kendrick, head of European FX strategy at Nomura International Plc.
“To achieve inflation in Japan is extremely difficult,” Kendrick said at Bloomberg Link’s FX Debates in London. “You have a whole generation that expects inflation close to zero and changing that takes time. They won’t achieve 2 percent inflation in the core sense.”
The Bank of Japan said in January it will buy 13 trillion yen ($135.8 billion) in assets each month next year to cap borrowing costs, while setting an inflation target of 2 percent.
Further action from Japanese policy makers is likely to cause the yen to weaken further, said Peter Rosenstreich, chief foreign-exchange strategist at Swissquote Bank SA.
“I expect more yen weakness and what the BOJ has in store for the yen will make it a prime funding currency,” he said at the FX Debates. “This will get pretty exciting when the BOJ realizes asset buying is not providing the kick and steps up to more radical solutions.”
The yen traded at 95.79 per dollar at 11:46 a.m. in London, having slumped 13 percent over the past three months. The currency slid to 96.71 yesterday, the weakest since August 2009.