Ueda’s Caution Risks Yen Punching Holes in BOJ Policy Logic

Bank of Japan Governor Kazuo Ueda’s newfound caution and the renewed yen weakness it has sparked risks damaging the logic of his campaign to keep normalizing policy in line with developments in the economy.

Ueda’s messaging may lose credibility if he ends up raising interest rates largely to protect the yen from further falls instead of moving when economic data supports a hike, according to economists.