Deputy Governor of the Bank of Japan: Timing of rate hike depends on economic and inflation performance

According to the Wisdom Finance APP, Hiroshi Nakamiya, Deputy Governor of the Bank of Japan, stated on Thursday that if the committee has "greater confidence" in achieving its economic and price forecasts, the Bank of Japan will consider raising interest rates.

Nakamiya pointed out that the Bank of Japan will decide when to raise interest rates based on the "overall" data released at each policy meeting.

He stated, "We are not walking on a predetermined path," and the Bank of Japan will "carefully assess the upcoming data, evolving outlook, and risk balance at each meeting."

Nakamiya mentioned that the types of data the Bank of Japan focuses on when formulating monetary policy vary and change over time. He noted that US employment and consumption data, as well as Chinese consumption data, may be more worth paying attention to than before.

Nakamiya said, "Later this year, we will obtain more data on the impact of this year's wage increases on service prices, as well as qualitative and quantitative information related to wage negotiations for 2025."

He added that the Bank of Japan will also receive more data on how exchange rate movements affect inflation through import prices, and the list of data to be monitored is "constantly changing."

Nakamiya stated that although statistical data for the entire fiscal year will not be available until the end of the year, the Bank of Japan does not necessarily have to wait until then to assess whether the Japanese economy is ready for further rate hikes.

"More importantly, we monitor data to identify developments not yet covered in our risk scenarios. It is equally important to look at data beyond the current priority list."

The Bank of Japan ended negative interest rates in March and raised the short-term lending rate to 0.25% in July, as the Bank of Japan believed it had made progress in achieving its 2% inflation target.

Bank of Japan Governor Haruhiko Kuroda has hinted that if economic and price trends align with the Bank of Japan's expectations, the Bank of Japan is prepared to continue raising interest rates.

However, he also stated that the Bank of Japan has "sufficient time" to carefully study risks such as market instability and uncertainty in the US economy to determine the timing of the next rate hike.

The market generally expects the Bank of Japan to maintain interest rates at the next meeting on October 30-31. However, with improvements in the Japanese economy and fading concerns about a US economic downturn, the prospect of a rate hike in December or early next year has resurfaced