You don’t have a preconceived idea of ​​the pace of subsequent rate hikes

Bank of Japan (BoJ) board member Naoki Tamura hit back on Thursday, saying “you don’t have a preconceived idea of ​​the pace of further rate hikes” when asked if the BoJ could raise rates again within a year . end or end of March of the current fiscal year.

Additional comments

Unlike the US and Europe, rate hikes in Japan are likely to be slow.

Exactly when Japan may see short-term rates reach 1% will depend on economic, price conditions at the time.

Data available 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 or not markets are stable could prevent the BoJ from conducting monetary policy that properly reflects economic and price developments.

In the long term, markets move in a way that reflects fundamentals.

That being said, high and rapid market volatility is not desirable.

When the markets are quite fragile, we need to set a period to ensure that the markets cool down.

I can’t say now whether the BoJ might raise rates by the end of this year.

The yen’s weakness has been somewhat reversed, but the rise in import costs seen earlier this year is likely to weigh on consumer inflation lagged.

Compared to when USD/JPY was at 160, the risk of rising inflation has decreased somewhat.

The BoJ must slowly raise rates in several stages, while carefully watching how each rate hike affects economic activity.

Market reaction

These comments fail to move the Japanese Yen as USD/jPY adds 0.32% on the day to trade near 142.80 at the time of writing.