Intervention to streWide-ranging comments from Yellen. On potential intervention in the yen FX market:

  • Treasury generally understands need to smooth out volatility in exchange rates but not to influence forex levels
  • View on any Japanese yen intervention would depend on circumstances

Japan is part of a G7 agreement not to take actions to manipulate its currency rate to gain a benefit. That's why officials there insist their super-easy monetary policy (which is a factor weakening the yen against higher rate countries like the US right now) is for domestic purposes, not to influence the yen FX rate. Japanese intervention to strengthen the yen could be viewed as contravening G7 agreements. Given the extent of the yen weakness that's not a strong argument right now though. Yellen just being a bit a stickler here.

And, on other matters

  • Demand-supply imbalances in US labor market have abated
  • There may be spillovers from China's economic difficulties to US
  • Morocco strongly wanted IMF, World Bank meetings to proceed, we want to be helpful for people of Morocco
  • US growth needs to slow in line with potential due to full employment
  • Expects China to use its policy space to avoid a slowdown with 'major proportions'
Yellen - deer in deflationary headlights