Meeting between Bank of Japan Governor Ueda and Prime Minister Ishiba: Direction of Economic and Monetary Policy

Japanese Prime Minister Shigeru Ishiba held a meeting with Bank of Japan Governor Kazuo Ueda to discuss economic and financial market challenges. According to the data platform, Governor Ueda indicated during this meeting that if economic growth and inflation rate improvements progress as expected, the Bank of Japan plans to implement additional interest rate hikes.

This meeting was the first regular meeting held by both parties since February and was not in response to an emergency. Governor Ueda also discussed market trends, including exchange rates, emphasizing that it is desirable for market movements to align with the fundamental factors of the economy.

Outlook on Monetary Policy and Its Impact on the Market

Governor Ueda's remarks are an important indicator of the direction of the Bank of Japan's future monetary policy. The current policy interest rate in Japan is maintained at 0.5%, but depending on the state of economic growth and the achievement of inflation targets, a gradual monetary tightening cycle may continue.

Market experts are paying attention to the impact of the content of this discussion on the yen exchange rate and the yield on Japanese government bonds (JGB). In particular, the impact on the USD/JPY exchange rate may be significantly influenced by changes in future monetary policy.

Since his appointment in 2023, Governor Ueda has been gradually normalizing the aggressive monetary easing policies of his predecessor, Haruhiko Kuroda. Notably, there has been progress in moving away from negative interest rate policies and in the flexibility of the Yield Curve Control (YCC) policy.

Market participants will increasingly pay attention to future economic indicators and the trends of the Bank of Japan's policy decision meetings.