FX.co ★ Japan Flags Faster Cross-Market Spillovers as Volatility Surges

Japan’s Finance Minister Satsuki Katayama said recent market turmoil has underscored how quickly interest rates can be affected by volatility spilling over from other markets—a dynamic she warned has become too significant to overlook. Katayama noted that “financial markets have seen an excessive degree of volatility since February 26, far beyond what would normally be warranted,” emphasizing that such instability can accelerate rate movements more than anticipated. She added that “interest-rate increases transmitted from other markets can materialise much more rapidly than we anticipate,” highlighting the speed and intensity of global financial linkages. The issue was widely acknowledged at a recent meeting of Group of Seven counterparts, Katayama said, calling for a more “renewed and well-considered” policy response to better manage these cross-market spillovers.