Bank of Japan (BoJ) board member Naoki Tamura made remarks on Thursday, noting that “we have no preconceived idea about the pace of future rate hikes,” when asked whether the BoJ could raise rates again by the end of the year or by the end of March of the current fiscal year.
Additional comments
Unlike in the US and Europe, rate hikes in Japan are likely to be slow.
The exact moment when Japan might see short-term rates hit 1% will depend on economic and price conditions at the time.
Data released so far show that Japan’s economy is moving in line with forecasts made at the BoJ’s July meeting.
Focusing too much on whether markets are stable or not could prevent the BoJ from conducting monetary policy that adequately reflects economic and price developments.
From a long-term perspective, markets move in ways that reflect fundamentals.
That said, large and rapid market volatility is undesirable.
When markets are quite fragile, we need to set a period to ensure that markets cool down.
It is not clear now whether the BoJ might raise rates by the end of this year.
The weak yen is reversing somewhat, but the rise in import costs seen earlier this year will likely impact consumer inflation with a lag.
Compared to when USD/JPY was at 160, the upside risk to inflation has diminished somewhat.
The BoJ should raise rates slowly in stages, while closely watching how each rate hike affects economic activity.
Market reaction
These comments fail to move the Japanese Yen, with USD/JPY up 0.32% on the day to trade near 142.80, at the time of writing.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
