With the inauguration of the Takaichi administration—which signals a stance of not tolerating hasty interest rate hikes—the USD/JPY pair has trended slightly weaker, sitting at around 152 yen as of this writing. Amidst this, Bloomberg published an article on October 28 titled “Goldman Sees Yen Returning to 100 per Dollar on Decade of Rising Rates.”
The article posits that:
- Policy rates will “gradually normalize.”
- Even if there is a return to “Abenomics-style” policies, the move is likely to be “fairly modest, given that inflation is politically unpopular.”
How should we evaluate this?
The “Market Random Walk” Reality
My fundamental stance is simple: The market is impossible to predict. Market prices already incorporate all currently available public information. Unless you possess insider information, you cannot consistently “beat the market” or profit by outmaneuvering it. This is a foundational concept in economics, often covered in standard macroeconomics textbooks.
Market participants and economists who engage in forecasting do so because their clients or the media demand it, or because it’s a necessary prerequisite for broader macroeconomic modeling. Deep down, they likely don’t expect to be right. If it’s a binary choice between up and down, you’ll be “right” half the time by pure chance. For that matter, macroeconomic forecasts, while slightly more reliable than market predictions, are also famously hit-or-miss.
The 10-Year “Anything Goes” Timeline
When you start discussing a “10-year horizon,” as this Bloomberg article does, the debate becomes a free-for-all. According to the IMF’s Purchasing Power Parity (PPP) data (accessed October 29, 2025), the implied exchange rate is approximately 93.52 yen to the dollar. Given that, the idea of the yen hitting 100 within a decade is hardly a bold prophecy—it’s a statistical probability that doesn’t even qualify as a “forecast.”
Furthermore, even if the yen remains weak, we won’t know the final result for a decade. By then, no one will remember what this particular analyst said ten years prior.
The “Takaichi Trade” and Interest Rates
It is true that under the Takaichi administration, interest rates are likely to be kept low in the short term, acting as a factor for a weaker yen. However, if fiscal stimulus successfully normalizes the economy, inflationary pressures will rise. Consequently, in the long run, interest rates should actually end up higher than they would under a pro-austerity administration.
If that is what they mean by “normalization,” then I largely agree with the scenario. But whether that leads to “1 dollar = 100 yen within 10 years” is something nobody can possibly know.
The comment about inflation being “politically unpopular” is a distraction. The real takeaway should be that because fiscal policy—rather than monetary policy—will become the primary engine of the economy, the upward pressure on future interest rates will actually increase. The Takaichi administration has no intention of repeating the mistakes of Abenomics, which relied far too heavily on monetary policy alone.
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