The Bank of Japan (BOJ) has indicated that it may take time to monitor the development of financial markets and the overseas economy before making a decision on monetary policy, Governor Kazuo Ueda said on Tuesday, indicating that the central bank is in no rush to raise interest rates again. .
He also voiced his hope to examine service price data for October, most of which will be released in November, to determine whether core inflation is heading towards the BOJ's 2% inflation target which is a key condition for raising interest rates.
"October is the month where service price revisions are in focus, so we must scrutinize the data," Ueda said in a press conference after meeting with business leaders in the western Japanese city of Osaka.
"While there are some elements we can estimate in advance, we need to see the actual data for confirmation," he added, indicating the BOJ may wait at least until December to raise rates again.
Ueda reiterated that the BOJ will raise rates if core inflation moves quickly towards the 2% target as expected, indicating no change in their stance to gradually raise borrowing costs from near-zero levels.
Still, he warned of risks to the economic outlook, including volatile financial markets and uncertainty over whether the US economy could achieve a soft landing.
The statement highlighted the BOJ's shift in focus from inflation risks to the possibility of slower global growth and a strengthening yen affecting Japan's export-dependent economy.
This statement is in line with what Ueda said after the BOJ's policy meeting on Friday, when the BOJ board voted unanimously to keep short-term interest rates at 0.25%.
Ueda emphasized that domestic economic conditions were moving in line with the BOJ's projections, with rising wages supporting consumer spending and helping to boost service sector prices.
Finally, it should be noted that the beginning of Japan's interest rate hike cycle occurred when many other central banks began to cut interest rates after aggressively tightening monetary policy to deal with high inflation.
The US Federal Reserve, for example, last week kicked off an expected series of rate cuts with a half-percentage point reduction after soft labor market data.
