History unlikely to look kindly on G-7's lack of consensus

Tokyo

TOKYO financial markets have responded with dismay at Japan's failure to secure G-7 backing for currency market intervention as a means of curbing the yen's rise. But that is probably just the start of a wider market reaction to the failure of the Group of 7 nations to reach consensus on key issues,

With little, if any, prospect in sight of concerted action among the world's most advanced economies to bolster growth, the onus will fall upon differential monetary and fiscal actions, and that implies greater divergence of relative interest rates, and aggravated capital flows.