Japan Bank Governor warns of market instability amid recent volatility

(MENAFN) On Friday, Kazuo Ueda, the Governor of the bank of Japan, issued a warning about the ongoing instability in global markets, while reaffirming his readiness to adjust interest rates if Japan's inflation and economic growth trajectories continue as anticipated. His remarks follow a period of significant market turbulence, which saw the yen plummet to a record low of 161 yen per dollar before making a sharp recovery, and Japan's stock market experiencing its highest peak followed by its most significant single-day drop. The recent instability has prompted concerns, though Ueda emphasized that the main drivers of the recent market fluctuations were worries about a potential U.S. recession, rather than the Bank of Japan's decision to end its negative interest rate policy in March.

Ueda's comments came in the wake of nearly six weeks of extreme volatility, which has unsettled both domestic and international investors. The Bank of Japan's shift away from its long-standing negative interest rate policy, aimed at combatting persistent deflation, marked a significant policy change. Despite this, Ueda clarified that the central bank's commitment to adjusting monetary policy remains steadfast if economic conditions and inflation align with expectations. The central bank will continue to closely monitor market developments and exercise caution in response to any emerging economic signals.

In a parliamentary hearing held specifically to address these concerns, Ueda underscored that there is no alteration to the central bank’s fundamental stance. The Bank of Japan remains prepared to modify its monetary policy as needed based on the trajectory of economic growth and inflation. Ueda’s comments reflect the bank's ongoing vigilance and readiness to act in response to economic conditions, amid an environment of heightened market uncertainty.  

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