Finance Associated Press, October 16th (Editor Zhao Hao) Japan's Bank of Japan Monetary Policy Committee member Seiji Adachi emphasized that the bank needs to gradually increase the benchmark interest rate. This statement has increased market expectations for the Bank of Japan to remain "on hold" this month.

On Wednesday local time (October 16), Seiji Adachi, in a speech at an event, said: "In the process of gradual interest rate increases, it is important to raise interest rates extremely slowly while maintaining a loose financial environment" until price trends reach 2%.

Seiji Adachi is one of the Bank of Japan's 9 monetary policy setters. It is believed that he is slightly more dovish than Governor Haruhiko Kuroda. At the end of this month, the Bank of Japan will announce its interest rate decision and outlook report, with the market expecting the bank to maintain its policy rate at the current level.

When asked about the next steps, Seiji Adachi did not provide a timetable, "I have not considered the issue of raising interest rates in a specific month. We should proceed cautiously and focus on the risks of raising interest rates too late or too early."

In response, Yuichi Kodama, Chief Economist at Meiji Yasuda Comprehensive Research Institute, believes that Seiji Adachi did not rule out the Bank of Japan taking action in December, "Originally, market expectations for the October meeting were not high, this just confirms that there won't be an interest rate hike this time."

Kodama said, "If the prospect of a soft landing in the USA economy strengthens and the financial markets remain relatively calm, I believe there is a high possibility of the Bank of Japan raising interest rates in December."

Anda Masato also mentioned that although economic data proves that monetary policy normalization is reasonable, too rapid rate hikes may lead to the economy falling back into deflation.

In recent weeks, the trend of narrowing US-Japan bond yields has stalled, causing the yen exchange rates to fall in the past month. As of the time of writing, the dollar against the yen is at 149.46, up nearly 4% this month.

Anda Masato said that a stronger yen may hinder the Bank of Japan's efforts to achieve sustained inflation targets, "this may create downward pressure on inflation, especially for commodities." He also stated that it is currently difficult to determine where Japan's neutral interest rate should be.

Last month, another hawkish Policy Board member, Naoki Tamura, stated that "short-term interest rates need to be raised to at least around 1%."

Anda Masato does not deny this, "I think it is feasible to use a cautious estimate of around 1% at present." However, he added that the neutral interest rate may change with economic developments.

Anda Makoto said that even if the Federal Reserve is in an easing cycle, it may not necessarily hinder the Bank of Japan from raising interest rates.