Monetary Policies of U.S., Japan: Unprecedented Dissenting Votes Indicate Difficult Path Ahead

Editorial

16:09 JST, May 1, 2026

Amid growing uncertainty about the economic outlook due to the turmoil of the Iran situation, the central banks of Japan and the United States have kept their policy interest rates unchanged and issued their statements. However, the high number of dissenting votes in both cases is an unusual situation.

U.S. President Donald Trump’s strategy toward Iran is difficult to predict. For this reason, both Japan and the United States likely have no option but to adopt a wait-and-see approach.

Will they tighten monetary policy to guard against inflation driven by soaring oil prices? Or will they continue with monetary-easing policy out of concern for an economic downturn?

With policymakers caught in this dilemma, the situation in which steering monetary policy has proven extremely difficult is likely to persist. Both Japan and the United States must deepen their analyses of price and economic trends and steer policy with great care.

The U.S. Federal Reserve Board has maintained its policy interest rate at 3.50%–3.75%. The decision to keep the rates unchanged was approved by an 11-to-1 majority, but three members of the Federal Open Market Committee dissented from the statement, which hinted at future monetary easing amid concern over rising prices.

This is reportedly the first time since 1992 that the total number of opposing votes has reached four.

The Fed has so far been exploring further rate cuts in response to the easing of inflation, but market expectations for a rate cut this year have receded.

Attention should also be paid to the growing tension between the central bank and the administration over consideration of the economy.

Trump repeatedly pressured Fed Chair Jerome Powell to cut interest rates, a situation that even temporarily developed into a criminal investigation.

Powell’s term as chair ends on May 15, but his term as a member of the Board of Governors continues until January 2028.

It is customary for the chair to step down from the board upon leaving the chairmanship, but Powell has indicated his intention to remain on the board for the time being. This is likely because he is concerned that the central bank’s independence is under threat.

Precisely because the difficult times continue, Trump should respect the Fed’s judgment.

Meanwhile, the Bank of Japan also refrained from raising rates for the third consecutive monetary policy meeting, keeping the policy rate at around 0.75%.

However, out of the nine Policy Board members, including Gov. Kazuo Ueda, three opposed the decision and called for a rate hike to around 1.0%. This marks the first time in about 10 years — since January 2016, when the central bank decided to introduce negative interest rates — that three or more members have opposed the executive board’s proposal.

The BOJ has confirmed the economic recovery and has been pursuing a path of normalization by raising interest rates. However, concerns about the situation in the Middle East are growing among the public. It is understandable that the central bank has adopted a cautious stance.

Prime Minister Sanae Takaichi is seen as cautious about raising interest rates prematurely. It is important for the BOJ to engage in careful communication for its next monetary policy meeting in June.

(From The Yomiuri Shimbun, May 1, 2026)