Central bank of Japan indicates additional interest rate hikes

(MENAFN) On Wednesday, Bank of Japan (BoJ) Deputy Governor Ryozo Himino stated that the central bank is prepared to tighten monetary policy further if inflation trends align with its forecasts. Speaking at a press conference in Kofu, Himino indicated that additional interest rate hikes would be considered based on economic conditions and inflation movements, signaling a continuation of the BoJ's current approach if the data supports it.

The BoJ recently raised interest rates to 0.25% at the end of July, marking its first increase in nearly 17 years. This new rate level represents the highest in the past 15 years. The move was part of the BoJ's strategy to address inflation and economic conditions, following a period of prolonged low rates. However, the decision contributed to a significant market reaction, with the Nikkei 225 index experiencing its largest decline since 1987, falling by 12.40%. This drop, combined with rising global recession concerns, eventually led to a market recovery.

Markets are now anticipating another potential rate hike from the BoJ later this year, with expectations shifting from October to December for this possible adjustment. This shift reflects the ongoing uncertainty and evolving economic conditions that the central bank must navigate. In the second quarter, Japan's economy grew by 0.8%, surpassing the expected 0.5% increase from the first quarter, but falling short of the 3.1% improvement initially forecasted.

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