Masatsugu Asakawa, the ministry’s vice minister for Global affairs, made the remarks after an emergency meeting with senior officials of the Bank of Japan and the Financial Services Agency, as the yen firmed against the dollar following policy meetings of the Japanese and US central banks Wednesday.
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The US central bank’s policy-setting committee left its target rate for overnight lending unchanged at the end of its two-day meeting on Wednesday.
Oil climbed after a surprisingly large drop in U.S. crude inventories emboldened investors ahead of next week’s meeting between Opec members and Russian Federation to discuss supply.
Economists believe policymakers would avoid a rate hike in November in part because the meeting falls just days before the US presidential election.
The dollar fell to a almost four-week low of 100.10 yen on Thursday after the U.S. Federal Reserve trimmed its long-term interest rate expectations and the Bank of Japan rebooted its monetary policy framework. The Fed said the US job market has strengthened and economic activity has picked up but business investment is soft and inflation too low.
“The economy has a little more room to run than previously thought”, Yellen said.
“It’s hard to get too excited about the dollar when the Fed is lowering its projected path of rate hikes into the future”. It was the first time it has used that wording since late past year, when it most recently raised rates. Fed Chair Janet Yellen said United States growth was looking stronger and rate increases would be needed to keep the economy from overheating and fuelling high inflation.
Indeed, the Fed made clear in updated forecasts issued Wednesday that it expects growth to stay tepid for the next three years.
The 100-yen level remains a key technical point, and a break of that could open the pair’s downside, said Yutaka Miura, a senior technical analyst at Mizuho Securities. They lowered their median projections for coming years, dropping the forecast for the long-term rate to 2.9 percent, from 3 percent in June.
The consensus among economists is for a hike in December as the Fed’s November meeting comes right around the U.S. Presidential elections.
HSBC’s bond strategist are forecasting that 10-year Treasury yields will fall back to 1.6%-a so far, spot-on prediction.
Stock market investors have piled in after the US Federal Reserve confirmed it would wait longer to lift interest rates. Real estate companies rose as investors, comfortable that interest rates would remain low, looked for income.
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The Fed also said in the statement that near-term risks to the USA economic outlook “appear roughly balanced”, a further sign that the central bank could raise rates by the end of this year.
