Bank of Japan Governor Kazuo Ueda was discharged from the hospital on Friday after nearly two weeks of treatment for an infected liver cyst, the central bank said. Ueda will return to office work on Tuesday while continuing treatment for about two more weeks.
The discharge comes days after Ueda missed the BOJ’s latest monetary policy meeting, during which policymakers raised interest rates to 1%, the highest level since September 1995. It marked the first time a BOJ governor missed a scheduled policy meeting since the central bank adopted its current decision-making framework in 1998.
Deputy Governor Ryozo Himino chaired the June meeting in Ueda’s place, while fellow Deputy Governor Shinichi Uchida, who was himself discharged from the hospital in May following leukemia treatment, led the post-meeting press briefing.
During his hospitalization, the BOJ said Ueda would submit a written statement outlining his policy views but would not cast a vote at the June meeting. The central bank had said in early June that Ueda was expected to remain hospitalized for about two weeks, work remotely during that period, and return in time for the next scheduled policy meeting on July 30-31. His Friday discharge puts him ahead of that original timeline for returning to office duties.
Rate Hike Proceeded in His Absence
The BOJ’s policy board moved ahead with its expected decision despite Ueda’s absence. The central bank lifted its key short-term rate by 25 basis points to 1.0% in a 7-1 vote, marking the highest level since September 1995 and pushing Japan’s borrowing costs to their highest point in 31 years. Board member Asada Toichiro was the sole dissenter, citing greater downside risks to production and employment than upside risks to prices.
In its policy statement, the board said underlying inflation could accelerate above its 2% target amid rising energy costs, while noting that financial conditions would remain accommodative despite the hike, continuing to support economic activity.
Policymakers said they would continue raising rates as warranted by economic, price and financial developments, while closely monitoring the impact of the Middle East conflict on Japan’s economy.
The rate decision came as the central bank battled inflation pressures linked to the war in the Middle East, even after Washington and Tehran reached a peace agreement. Analysts had pointed to a weak yen, leading to a wholesale inflation that has spiked a three-year high in May as key factors keeping the BOJ under pressure to continue its tightening path.
A Board Already Tested by Health Issues
Ueda’s hospitalization followed a similar health absence by Deputy Governor Uchida, who was treated for leukemia and discharged from hospital in late May.
With both Uchida and Himino having stepped in to manage policy communication during Ueda’s absence, the episode highlighted how thin the BOJ’s senior leadership bench was tested during a critical phase in normalizing decades of ultra-loose monetary policy.
Some analysts had said before Ueda’s discharge that a prolonged absence could complicate the BOJ’s ability to project unity and resolve to markets.
Former BOJ board member Takahide Kiuchi said the governor missing a single meeting was unlikely to cause major problems, but that a longer absence would be a different matter, and could draw attention to internal divisions on the nine-member policy board.
Ueda took over as BOJ governor in April 2023 and has presided over the central bank’s gradual exit from years of negative interest rates and yield curve control, policies inherited from his predecessor, Haruhiko Kuroda.
Under his leadership, the BOJ delivered Japan’s first rate hike in 17 years in 2024 and has continued a steady series of increases since, with Tuesday’s move marking the latest step in that tightening cycle.
The bank’s next scheduled policy meeting is set for July 30-31.
