Then markets erupted with volatility within days of a second hike on July 31. As many traders blamed the BOJ for sparking the global market gyrations by telegraphing further hikes, Deputy Governor Shinichi Uchida stepped in to assure investors the central bank won’t be raising rates when market instability persists.
Bank of Japan Governor Kazuo Ueda’s path to policy normalisation got a lot rockier after market ructions this week, leaving him facing multiple risks ahead.
When he took the helm at the BOJ in April of 2023, Ueda inherited a complex monetary framework that seemed almost impossible to exit. After more than a decade of unconventional monetary easing, the bank held more than half of the market for Japan’s government bonds. And yet, after ending the world’s last negative interest rate in March, Ueda appeared to be moving smoothly toward normalisation.
