- Agreed that BOJ and government will continue to coordinate closely
- Explained monetary policy thinking to Takaichi
- Did not discuss any specifics (when asked about market prospects of June rate hike)
- Takaichi said she hoped for BOJ to conduct monetary policy appropriately
- Adding that she hoped for it to take into account government steps to cushion against the blow of rising inflation
- Able to exchange views in a positive manner on various fronts
- Discussed economic, price, market developments in taking into account the Middle East conflict
- The meeting was beneficial to all parties
A couple of token remarks there mostly by Ueda. This is the usual quid pro quo whenever both sides meet, with Takaichi also likely to reiterate the same kind of rhetoric when she gets the chance.
As mentioned before, the BOJ is in a very tough spot at the moment when it comes to navigating monetary policy.
They had previously set things up for the spring wage negotiations to justify their next rate hike. However, the Middle East conflict has thrown that plan out the window completely.
Sure, inflation pressures look set to rise and that will vindicate another interest rate increase. However, the price outlook is now muddied by the fact that cost push inflation is also coming into the picture. That is something that the central bank has actively avoided as part of their justification to raise interest rates previously.
Adding to that, the Japanese economy is now taking a heavy hit from higher energy prices as a result of the Middle East conflict. As such, rate hikes in the wake of a struggling economy won’t go down well with households and businesses. That especially as they are also needing to deal with higher costs in general.
And then you have the Takaichi trade still running in the background
