Source: Jin10 Data
Author: Xiao Yanyan

Japan Banks Governor Katsunobu Kato stated that the Bank of Japan has time to consider the next policy measures, indicating that even if the yen exchange rates fall to nearly a three-month low, the central bank will not raise interest rates next week.

After meeting with counterparts from the G20 in Washington, Kato told reporters, "I believe we have enough time" to make policy decisions.

Kato said, "We need to look at the big picture, not only seriously study the impact of the weak yen on Japan's inflation, but also study the impact from the U.S. economy - which may be related to the U.S. presidential election."

Kato stated that he remains highly vigilant about the risks from the U.S. economy, although he acknowledges that optimism seems to be spreading. Speaking at the International Monetary Fund (IMF) and World Bank annual meetings on Wednesday, he said he has been concerned about the U.S. economy over the past few months.

The Bank of Japan will make a policy decision on October 31, when investors will be watching for any clues about the timing of another rate hike. Kato's speech is likely to reinforce market expectations, with nearly all Bank of Japan observers already expecting no policy changes this month.

According to the latest survey by Bloomberg, most economists expect the Bank of Japan's next move to take place in December or January next year, making the guidance after the upcoming meeting crucial.

Ueda made the above remarks earlier this week after the yen fell to its lowest level since July 31 against the US dollar. Investors are watching whether the depreciation of the yen will amplify the upward risks of inflation, thereby advancing the time for rate hikes.

At the same press conference, Japanese Finance Minister Taro Aso, sitting next to Ueda, reiterated his warning about the yen. He said he told his counterparts in the G20 that the sharp fluctuations in the forex market deserve close attention.

Editor/Jeffy