Bank of Japan Governor Kazuo Ueda will hold his first formal bilateral meeting with Prime Minister Sanae Takaichi on Tuesday, a high-stakes encounter that may offer clues on how soon the BOJ resumes its rate-hike cycle. The meeting comes as the yen weakens to a nine-month low, prompting fresh concern from the finance minister about volatile currency moves.
Ueda has hinted that a rate increase could come as early as December or January, reflecting inflation running above 2% for more than three years. But Takaichi, an advocate of aggressive fiscal and accommodative monetary policy, has publicly expressed discomfort with early rate hikes, urging the BOJ to proceed “in lockstep” with government efforts to support the economy.
Markets expect the dovish prime minister to pursue large stimulus and pressure the BOJ to slow its normalisation path, a perception that has contributed to renewed selling of yen and government bonds. Analysts warn that delaying rate hikes risks further yen depreciation and higher import costs, undermining Takaichi’s goal of lifting real wages.
The meeting, set for 3:30 p.m. local time, is routine in format but unusually loaded with policy significance:
- The BOJ head holds a bilateral meeting after the inauguration of a new prime minister
- the two already met at a government panel meeting last week
Takaichi took office only last month, and investors are watching closely to see whether she will endorse, oppose or try to delay the BOJ’s expected move from 0.5% to 0.75%. Her adviser has already cautioned against near-term tightening after Q3 GDP showed a contraction driven by weak consumption and exports.
The BOJ ended its decade-long super-easing framework last year and delivered one rate hike in January. It has since stayed on hold as it assesses the domestic fallout from higher U.S. tariffs, leaving markets acutely sensitive to any signals emerging from today’s meeting.
