Implications of Yen Weakness on Japan's Economy

Yen intervention aims to set a floor under yen weakness, not to transition yen from weakness to strength. Ministry of Finance worries as yen drifts towards 160, leading to expectations of intervention which works temporarily but raises concerns about sustainability and potential need for Bank of Japan intervention. Low inflation in Japan may not initially seem concerning, but it limits monetary policy flexibility, makes wage adjustments harder, and may not lead to desired inflation. Yen weakness benefits multinationals and exporters but does not translate into increased real wages or domestic spending, potentially hindering a self-sustaining inflationary process.