BoJ Governor Ueda hospitalized as June rate hike to 1% looms

Bank of Japan Governor Kazuo Ueda will miss the June policy meeting after being hospitalized for a liver infection, leaving deputies to steer a widely expected rate hike to 1 percent.

Bank of Japan Governor Kazuo Ueda was hospitalized June 10 for a liver cyst infection, forcing him to miss the June 15-16 policy meeting where the board is expected to raise rates to 1 percent, the highest since 1995.

"Ueda's health issue will not affect monetary policy execution," said Takeshi Minami, chief economist at Norinchukin Research Institute. "The rate decision itself is already largely determined."

Deputy Governor Ryozo Himino will chair the meeting while Deputy Governor Shinichi Uchida handles the post-decision press conference. Ueda, 74, will express his policy stance through a written statement but will not vote. The yen weakened against the dollar following the announcement, according to Bloomberg data.

The absence removes Ueda's direct influence from the vote at a pivotal moment. While the hike to 1 percent is priced in, markets will scrutinize Uchida's press conference for forward guidance signals on the pace of future tightening. Ueda is expected to return for the July 30-31 meeting.

The hospitalization marks the first time Ueda has missed a policy meeting since taking office in April 2023. The BoJ said he is expected to undergo about two weeks of treatment and will work remotely during his hospital stay.

A Bloomberg survey showed nearly all economists expect the board to raise the policy rate to 1 percent, a level not seen in three decades. Multiple board members have voiced support for further tightening since the last meeting, laying the groundwork for the decision. The current policy rate stands at 0.75 percent after the BoJ delivered a 25-basis-point hike in April, its fourth increase since ending negative rates in March 2024.

The yen weakened against the dollar following the hospitalization announcement, reflecting uncertainty around leadership continuity at a critical juncture. The currency has been under pressure throughout the tightening cycle, trading near 150 per dollar even as the BoJ raised rates, as the interest rate differential with the U.S. remained wide.

The focus now shifts to Uchida's press conference. The deputy governor has his own recent health history — he was hospitalized for leukemia in November 2025 and attended some meetings remotely before being discharged last month. "Uchida is experienced, and the market's attention will be on his hints about the timing of the next move and related language," Minami said. Overnight index swaps currently price a roughly 85 percent probability of a hike to 1 percent in June, with another 25-basis-point increase by year-end seen as possible.

The BoJ's tightening cycle has been closely watched by global markets. A move to 1 percent would mark the culmination of a normalization path from negative interest rates that began in March 2024. The last time Japanese rates were at 1 percent, the economy was emerging from the asset price bubble's aftermath in the mid-1990s. The BoJ's policy rate stood at minus 0.1 percent as recently as early 2024 before the central bank embarked on its most aggressive tightening in nearly two decades.

The absence of Ueda from the vote, while unlikely to alter the June outcome, introduces an element of uncertainty about the longer-term policy trajectory. The governor has been the driving force behind the normalization push, and his health will be a factor markets monitor closely going forward. The next scheduled policy meeting is July 30-31, when Ueda is expected to return. If the June hike proceeds as anticipated, the July meeting could provide the first opportunity for Ueda to signal the pace and endpoint of the tightening cycle.

This article is for informational purposes only and does not constitute investment advice.