Although Japan's stock market just experienced the tragedy of 'Black Monday' earlier this month, the determination of the Bank of Japan to raise interest rates seems unshaken.

This Friday, Bank of Japan Governor Haruhiko Kuroda stated during questioning in parliament that if Japan's inflation and economic data continue to meet the central bank's expectations, the Bank of Japan will continue to raise interest rates.

Kuroda continues to send hawkish signals.

In July of this year, the Bank of Japan raised the benchmark interest rate from the range of 0% to 0.1% to 0.25%, marking the second rate hike of the year.

Due to Kuroda's hawkish signal at the time, which accelerated the rise of the yen, the Japanese market experienced a crash earlier this month, with the Nikkei index plummeting over 12% on August 5th, resulting in the tragic "Black Monday" incident, even shaking the global market.

This also once forced Bank of Japan Deputy Governor to urgently speak out, soothing market sentiment by stating that the Bank of Japan would not rashly raise interest rates during market turmoil.

However, as the market turmoil gradually subsided, Kuroda once again sent hawkish signals in his speech this Friday.

In the market turmoil at the beginning of this month, Utada believes that the market's concern about the US economic situation was a key catalyst. Now, the 'excessive' concerns about the US economy in the market have eased, implying a reduced risk of market turbulence.

"If we can confirm that the economy and prices will increase in certainty as predicted, our position will not change, and we will continue to adjust our policies," Utada and his colleagues said.

However, Utada also hinted that he does not intend to rush the next rate hike. He reiterated that the Bank of Japan needs to carefully observe temporarily to confirm the impact of financial market fluctuations on inflation prospects. He said: 'We will currently pay close attention to the financial markets with a sense of urgency.'

This indicates that even after experiencing financial market turmoil in early August, the Bank of Japan's stance remains relatively firm.

Expected to hike interest rates again by the end of the year

Utada's remarks indicate that the risk of financial turmoil will not prevent the Bank of Japan from considering further rate hikes in the future, even if the next rate hike is not imminent.

After Shiida's speech, the yen continued to rise against the dollar. As of the deadline, the yen rose by more than 0.4% against the dollar, hovering around 145.70 yen to 1 dollar. In contrast, in early July, the yen once fell below the 161 yen mark against the dollar, hitting a new low in 38 years.

Although the market currently generally expects the Bank of Japan to maintain its policy at the September meeting, according to a survey conducted earlier this month, many economists expect the Bank of Japan to raise interest rates again before December.

In his speech, Ueda also promised that the Bank of Japan will communicate closely with the market to ensure that market participants will not be surprised by the Bank of Japan's policy decisions, thereby avoiding causing another huge impact on the market.

Editor/ping