Bank of Japan (BoJ) board member Naoki Tamura spoke again on Thursday, noting that “we don’t have a set pace for further interest rate hikes.” He was responding to a question about 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 notes

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

The exact moment when short-term interest rates in Japan reach 1% will depend on the current economic and price situation.

Data released so far indicate that Japan’s economy is growing in line with forecasts presented at the Bank of Japan’s July meeting.

Focusing too much on whether markets are stable or not may prevent the BoJ from conducting monetary policy that adequately reflects economic and price developments.

Over the long term, markets move in a way that reflects fundamental factors.

With this in mind, it should be emphasized that high and rapid market volatility is undesirable.

When markets are particularly delicate, we need to identify a period in which sentiment will composed down.

It is impossible to say now whether the BoJ will be able to raise interest rates by the end of this year.

The tender yen will reverse somewhat, and the rise in import costs seen earlier this year is likely to have a lagged effect on consumer inflation.

Compared to when the USD/JPY exchange rate was 160, the risk of rising inflation has decreased slightly.

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

Market reaction

These comments have no impact on the value of the Japanese yen, as the USD/JPY pair is up 0.32% on the day and is trading around 142.80 at the time of writing.