President Trump sent a handwritten letter to Fed Chair Powell demanding that interest rates be lowered to Japanese levels. This is a clear violation of the independence of the central bank.
The next Fed chair will undoubtedly be a clear dove, in line with Trump’s wishes.
But if inflation occurs, who will take responsibility?

The independence of the central bank has protected the country from inflation by placing monetary policy beyond the reach of politicians. If inflation progresses, many citizens will bear the consequences of this failure.
It is clear that the new ultra-dovish Fed chair’s interest rate cuts will eventually strengthen the downward trend of the dollar. The market will begin to anticipate this before the new chair is actually appointed.

Last week’s US employment statistics exceeded expectations. The dollar-yen exchange rate rose by more than 1 yen in an instant.
However, the market’s current focus is on tariffs and Trump’s economic policies. President Trump appears to have sent letters to various countries listing tax rates. We will soon find out whether Japan was able to extend the 9 July deadline and what the tax rates will be.
As President Trump has stated, if the tariffs truly reach 30-35%, the impact on the Japanese economy will be severe. Corporate performance will decline, and the Nikkei average will likely fall.

The impact on the dollar-yen exchange rate is unclear, but initially it may move toward yen appreciation before shifting toward yen depreciation. The Bank of Japan’s interest rate hike will be postponed. We await the tariff figures.