Bank of Japan Expected to Raise Rates to 1% as Governor Ueda Misses Meeting

The Bank of Japan is set to hold a key monetary policy meeting next Tuesday, with markets widely expecting a 25-basis-point rate hike to 1%, which would mark the highest level since 1995 and signal further policy normalization. According to ChainCatcher, uncertainty around the meeting has increased after Governor Kazuo Ueda was hospitalized for health reasons and will miss both the meeting and the post-meeting press conference, with Deputy Governor Shinichi Uchida taking over communications. The U.S. dollar rose above 160 yen at one point, nearing a two-year high and approaching levels seen as sensitive for potential intervention. Traders said the main focus is not the hike itself, which is largely priced in, but how forcefully the central bank signals its future rate path. Institutional analysts said a dovish message could further weaken the yen and push Japanese government bond yields higher, while a clearer tightening stance could help stabilize exchange-rate expectations. Japan is also facing constraints including rising imported inflation pressures, energy price volatility, and expectations of fiscal expansion, complicating the policy outlook. Recent data showed Japan’s core inflation has climbed to 3.5%, a recent high. Analysts said the meeting could also serve as a test of changes in the BOJ’s communication framework, with Uchida’s remarks likely to influence short-term moves in the yen and global rates markets.