Commentary: Japanese Prime Minister’s Resignation Will Have Neutral Impact on Monetary Policy

By Kyohei Morita

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Kyohei Morita, chief Japan economist of Nomura.

Japan’s Prime Minister Fumio Kishida recently announced that he will step down after the ruling Liberal Democratic Party elects a new leader in September. Despite the change in leadership, we expect neutral impact on the course of monetary policy decisions.

The Bank of Japan (BOJ) wrapped up its latest monetary policy meeting in July. Judging by the subsequent policy statement, the July outlook report and BOJ Governor Kazuo Ueda’s press conference, the central bank’s policy response function may have changed.

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Japan’s Prime Minister Fumio Kishida will step down after the ruling Liberal Democratic Party elects a new leader in September.
The Bank of Japan (BOJ) may raise its policy interest rate in December 2023 and twice in 2024, despite an "accommodative" policy phase.
BOJ Governor Kazuo Ueda is reassessed as "slightly hawkish," and global market turmoil lowers the likelihood of an October rate hike.

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Who’s Who

Nomura: Nomura is a leading financial services group and investment bank. Kyohei Morita, the chief Japan economist at Nomura, provides insights on Japan's monetary policy, noting potential interest rate increases by the Bank of Japan. The firm emphasizes the likelihood of a December rate hike and foresees further increments in 2024.

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What Happened When

July 2024：: The Bank of Japan (BOJ) wrapped up its latest monetary policy meeting.

September 2024：: Japan’s Prime Minister Fumio Kishida will step down after the ruling Liberal Democratic Party elects a new leader.

October 2024：: Potential date for the BOJ to raise its policy interest rate.

Beginning of December 2024：: Japanese Trade Union Confederation normally gives the first indications of its policy on wage demands for the following year.

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