While the BOJ raised its policy rate, the US Federal Reserve’s rate hike coincided with the Takaichi administration’s cabinet reshuffle, bringing into focus both reliance on external pressure and domestic fiscal debate.
The BOJ raised its policy rate to 1.25%. The Takaichi administration had been reluctant to raise rates, but is said to have gone ahead with the move under pressure from the United States, prompting views that efforts to address the weak yen and curb imported inflation have come to depend on external factors.
The Federal Reserve raised rates by 0.25 percentage points on the 16th, its first hike in 3 years, bringing the policy rate to 3.75–4.0%. While US market participants have praised the move as demonstrating a strong commitment to containing inflation and noted that it was unanimous, it has been pointed out that there were dissenting views on the Japanese side.
BOJ Governor Ueda explained at a press conference that the underlying inflation rate remains below 2%. Consumer prices rose 1.7% year on year in August, with support for gasoline and electricity and gas charges cited as factors restraining actual price increases.
In the Takaichi administration’s cabinet reshuffle, Nakatsukasa Hiroshi (中司 宏) joined the Cabinet for the first time as Minister in Charge of Regulatory Reform. While the administration regards regulatory reform as a key driver of growth, some reports have suggested that it intends to prioritize fiscal stimulus, prompting discussion of the risk of fiscal expansion.