The Japanese yen strengthened beyond 156 per dollar on Thursday, breaking a two-day losing streak after comments from Bank of Japan Governor Kazuo Ueda suggested the possibility of a near-term interest rate hike. Ueda indicated that the central bank will closely assess incoming economic data at its March and April meetings before making any decision on raising rates.
His remarks came after the government nominated two reflationist academics to the BOJ’s policy board, a move that underscores expectations the bank will advance with policy normalization but in a measured, cautious manner. Adding to the mixed signals, Prime Minister Sanae Takaichi reportedly expressed concern about further rate increases during a meeting with Ueda last week.
Takaichi, known for her strong pro-stimulus stance, favors expansionary fiscal measures alongside accommodative monetary policy. Her position introduces some uncertainty over the speed at which the BOJ will tighten policy, even as markets continue to anticipate gradual normalization later this year.
