Bank of Japan Governor Kazuo Ueda’s road to policy normalization hit a rough patch last week, as market turbulence added multiple risks to his agenda. Taking the reins in April 2023, Ueda faced the daunting task of unwinding a complex monetary framework built on unconventional easing measures. Despite successfully ending negative interest rates earlier in the year, the BOJ’s path to normalization was suddenly disrupted by market volatility following a second rate hike on July 31.
With the central bank under fire for potentially triggering global market instability, Deputy Governor Shinichi Uchida stepped in to reassure investors. Uchida sought to allay fears by announcing that the BOJ would not raise rates during periods of market turmoil. The sudden market reaction serves as a reminder of the challenges faced by Ueda as he navigates towards a more standardized monetary policy amid uncertain economic conditions.
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