Ueda Stuck Between US and Japan in Rate Hike Conundrum
Bank of Japan Governor Kazuo Ueda is facing a difficult balancing act as he navigates differing opinions from US Treasury chief Scott Bessent and Japanese Prime Minister Sanae Takaichi. On one hand, Bessent has been urging Ueda to accelerate monetary tightening, while on the other hand, Takaichi wants faster economic growth.
The BoJ last Friday raised interest rates for a second time in three months, with two of its members voting against the hike, appointed by Takaichi. This suggests that opposition to future rate hikes may be more pronounced when Takaichi replaces two hawkish board members next year.
Ueda has emphasized that policy has entered a new stage, but market reaction was lukewarm, with the yen falling 1.3% against the dollar after his comments. Many investors see currency moves as a key driver of decisions, making Ueda's job 'as hard as it gets', according to Deutsche Bank's Shoki Omori.