Kazuo Ueda now has two — and they want to move at different speeds. Ueda on Friday raised interest rates for a second time in three months, giving Scott Bessent — the U.S. Treasury chief who stepped in to bolster the yen — the acceleration of monetary tightening he’s been urging.
But Prime Minister Sanae Takaichi is focused on faster economic growth. Her two BOJ appointees were the only ones to vote against Friday’s hike, a harbinger of what may come next year when she gets to replace the two most hawkish members of the current board. At a turbulent time for global bond markets, with inflation and borrowing costs on the rise almost everywhere, keeping both camps happy will only get harder.
It’s not clear what level of rates would satisfy Bessent, whose priority is to shield U.S. Treasuries from any ructions in Japan — or how that squares with domestic needs as seen by the prime minister. Inflation may be trending above-target but consumer spending and broader economic growth have lagged.
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