By Leika Kihara
Bank of Japan Governor Kazuo Ueda is facing hurdles in his attempts to raise borrowing costs as the yen strengthens and the new political leadership leans towards loose monetary policy, making rate hikes more difficult.
New Japanese premier Shigeru Ishiba's recent comments suggesting the economy is not ready for further rate hikes have surprised markets, causing the yen to weaken against the dollar and raising doubts about the BOJ's aggressive stance on raising rates.
Political uncertainties surrounding the upcoming general election on Oct. 27 are expected to delay any rate hikes by the BOJ, despite the longer-term case for tightening monetary policy.
Analysis:
The recent remarks by Japanese premier Shigeru Ishiba have added to the challenges faced by Bank of Japan Governor Kazuo Ueda in raising borrowing costs. The political shift towards loose monetary policy and the strengthening yen have made rate hikes more difficult. While the longer-term case for tightening monetary policy remains, the upcoming general election is expected to delay any immediate rate hikes. This uncertainty could impact Japan's economic outlook and financial markets, affecting individuals and investors alike.