Arguably, the single most important policy objective of Japan’s new administration is to end decades of deflation. The resulting change in inflation expectations is what is simultaneously driving the Yen weaker and Japanese equities higher. From this policy perspective, Goldman Sachs thinks that further Yen weakness could be needed, given that the traditional monetary transmission mechanisms such as the credit channel has broken down in Japan due to a lack of demand for funds by non-financial corporates, ultimately reflecting rapid population aging. So, how far USD/JPY can go if the primary purpose of the policy ... (full story)