Bank of Japan power reshuffle: Sanae Takaichi's personnel arrangement may change the rate hike path

Golden Ten Data reported on June 22 that a dissenting vote in the latest rate hike decision by the Bank of Japan shows that the window for “hawks” to push interest rates back to normal levels is closing. Asada Ichiichiro—a new member attending only his second policy meeting—disagreed with most of his colleagues in last week’s vote and opposed raising the benchmark interest rate to its highest since 1995. He is also the first policy board member appointed by Prime Minister Sanae Takaichi and almost openly showed his support for an accommodative monetary policy during the vote. The actions of this new member provide a snapshot of the possible future direction for the policy board under the leadership of Kazuo Ueda. Sanae Takaichi is set to appoint another member with a “reflationary” policy bias later this month to replace Junko Nakagawa, whose term is expiring. Meanwhile, two other firmly “hawkish” members will also see their terms end in about a year, giving Takaichi an opportunity to make further nominations and thus significantly shift the overall tendency of the 9-member policy board.