An official from the Bank of Japan rules out another rate increase this year.
According to a former BOJ official, the central bank would postpone further interest rate increases until the next year, indicating that it would prioritize short-term market stability.
Makoto Sakurai, a former board member, stated late Friday that “they won’t be able to hike again, at least for the rest of the year,” according to Bloomberg. “It’s uncertain if they can complete even one hike by March of next year.”
On July 31, the Bank of Japan hiked its benchmark interest rate for the first time in more than ten years, from a range of zero to roughly 0.25%. Additional rate increases were also hinted at by the central bank.
The “risk-on” yen carry trades ended as a result of the Japanese yen’s rise in value due to the change in policy from maintaining zero interest rates. The subsequent decline in conventional risk assets had a significant impact on Bitcoin, causing it to plummet from approximately $65,000 to $50,000 in less than seven days.
Since then, amid indications of a risk reset on Wall Street, Bitcoin has recovered to trade above $58,000.
Due to the market turbulence, BOJ Deputy Governor Shinichi Uchida had to retract the bank’s aggressive pledge, stating that rates would not be raised during uncertain markets.
Sakurai stated, “Market stabilization is very important now, so Uchida’s remarks were appropriate.”
“The major issue is that Ueda did not make it clear that the BOJ will continue its easing program; instead, it is transitioning from excessive to prudent monetary easing. They’ve always maintained that requirement,” Sakurai continued.
