The US Federal Reserve decided to raise rates by 0.25% in September, while the Bank of Japan raised its rate by 0.25% on 18 September to 1.25%. With the yen showing little reaction, the market focused on the background to the appointment of 2 Bank of Japan Policy Board members.
The US Federal Reserve raised its policy rate to 3.75–4.00% on 16 September. As President Trump's calls for rate cuts clashed with the Fed's stance, the direction of US monetary tightening became clearer.
The Bank of Japan raised its policy rate by 0.25% on 18 September to 1.25%. As rate hikes continued at levels not seen in several decades, Governor Ueda (植田) said at a press conference that "the policy environment has changed" and indicated that he would not rule out further rate hikes depending on price developments.
Meanwhile, although the market viewed the yen's reaction as limited, the 2 Bank of Japan Policy Board members attracted attention in connection with the rate hike. Asada Toichiro (浅田 統一郎) and Sato Ayano (佐藤 綾野), who voted against the measure, are both considered reflationists and were seen as supportive of stable, proactive fiscal policy and monetary easing.
While some observers noted that the Bank of Japan's rate hike was virtually the only factor supporting a stronger yen, others viewed dissent from the members appointed by the Prime Minister as making a rapid rate hike more difficult. The market is therefore expected to remain focused on the policy confrontation between the Fed and the Bank of Japan and on the changing policy environment.