PIMCO Global Fixed Income Chief Executive and Chief Investment Officer Arif Husain said that if the yen continues to weaken or unexpected strong wage growth, Japan's inflation in the second half of the year may be higher than expected. This may prompt the Bank of Japan to raise interest rates again at the October meeting and further slow down its asset purchases.

He said that a weak yen could lead to a faster tightening of monetary policy by the Bank of Japan. However, rate cuts by other developed market central banks could offset some of the impact. In early 2024, the yen to dollar exchange rate fell to its lowest level since the mid-1980s. However, due to the Fed's intention to cut rates, coupled with the ECB's easing of policy, the pressure for the Bank of Japan to raise rates may be relatively low.

However, Arif Husain believes that the market-wide volatility that occurred on August 5th has not yet come to an end. The tightening of monetary policy by the Bank of Japan and its impact on global capital flows could have a significant impact over the next few years. However, given the impact of other trends, such as fiscal expansion in some developed countries that may not be sustainable, market fluctuations may become the norm rather than a major shock.

In other words, since the global financial crisis, investors have been in a favorable position. However, the situation has changed, and the investment landscape in the next few years may be more challenging. The impact of the Bank of Japan's tightening policy on global capital flows is one of the changes that investors should closely monitor.