The Japanese economy and its equity market could probably handle some volatility, says BNY Investments' Aninda Mitra. If anything, volatility-- realized, at the money, implied--has come off given the FX interventions which have been happening, he says. "That has actually--or ironically--fueled the carry trade." Such trades aren't just about rate differentials but also adjusted for volatility. If volatility comes off and rate differentials widens, which is what has happened, the carry-vol ratio has suddenly become attractive again. Then it would make sense to allow vol to go back up a bit via either a very large FX intervention or a surprise rate hike. "I wouldn't rule out one or the other. I think both are both our legitimate policy tools." (fabiana.negrinochoa@wsj.com)