Deputy Governor Ryozo Himino of the Bank of Japan reaffirmed on Wednesday that the central bank would keep raising interest rates in the event that inflation continued as planned while also closely observing the state of the financial markets.
Governor Kazuo Ueda made similar remarks last week, indicating that the recent market turbulence would not derail the administration’s long-term rate-hike plans.
However, Himino stated in a press conference following his meeting with business leaders in the central Japanese city of Kofu that the central bank would first need to monitor financial markets with the “utmost vigilance” as they remain unstable.
The BOJ will assess how recent market volatility, the July interest rate hike, and the trajectory of the US economy affect its economic and pricing outlook.
In July, the BOJ surprised the financial world by hiking interest rates to a 15-year high and indicating that it was prepared to raise borrowing costs even more in light of growing expectations that inflation would eventually reach its target of 2%.
Although markets have stabilised, the BOJ’s hawkish tone caused the battered yen to soar and Tokyo stocks to plunge in their most significant one-day loss since the Black Monday sell-off in 1987.
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