Bank of Japan Reaffirms Commitment to Interest Rate Hikes Amid Market Volatility - Analysis & Breakdown
In a recent speech, Bank of Japan Deputy Governor Ryozo Himino reiterated the central bank's stance on raising interest rates while closely monitoring financial market conditions. This follows Governor Kazuo Ueda's comments last week, assuring that market volatility would not derail long-term rate hike plans.
The central bank remains vigilant about unstable financial markets and their impact on economic and price outlook. Himino emphasized the need to adjust monetary easing based on economic activity and price projections.
In July, the BOJ surprised markets by raising interest rates to a 15-year high, signaling readiness for further hikes to achieve the 2% inflation target. This hawkish tone caused the yen to rise and Tokyo stocks to plummet, though markets have since stabilized.
Ueda's commitment to raising rates if inflation stays on track was reiterated in parliament, with economists predicting another rate hike this year. Himino noted that despite recent yen strength, Japanese exporters' business plans align with current rates.
Overall, the BOJ expects to achieve a balanced state next fiscal year with consistent inflation and slightly above-average economic growth. Despite stock price volatility, Japanese companies have adapted and maintained competitive edges, minimizing the impact on business sentiment.