BOJ Watchers’ Focus on LDP Election Comes Down to One Candidate

Bank of Japan watchers are keeping a close eye on the leadership election of the nation’s ruling Liberal Democratic Party for potential implications on the monetary policy outlook, with attention focused on a strong advocate of maintaining an easing stance.

While Japan’s central bank won independence from the government more than a quarter century ago, it has regularly been subject to political pressure in recent decades. The BOJ is currently pursuing a so-called normalization of policy after long holding interest rates near zero, in a reflection of sustained inflation.