Bank Of Japan Governor Cautions On Continued Market Instability

TOKYO, Aug 23 (Bernama-Xinhua) -- Bank of Japan (BOJ) Governor Kazuo Ueda on Friday has warned that financial markets, both domestically and internationally, remain unstable following the recent market turmoil triggered by the central bank's interest rate hike.

He emphasised that the authorities will maintain high vigilance and closely monitor the situation to manage potential risks.

The BOJ will continue to pursue policy normalisation as long as the economy moves toward stable 2 per cent inflation, Ueda told a parliamentary meeting. "There is no change in our basic stance to adjust the degree of monetary easing," he said.

The remark came as some market players assumed that the recent market ructions, marked by the benchmark Nikkei stock index's biggest plunge on record earlier this month, would discourage the BOJ from further normalisation.

When asked about the turmoil in the stock market, Ueda cited concerns over a potential US recession as a key catalyst, adding that "overdone" worries about the US economy have since eased.

Regarding the possibility of additional interest rate hikes, Ueda said the central bank will decide after cautiously examining the impact of its latest rate hike in July on the economy and prices.

At the two-day policy meeting through July 31, the BOJ decided to raise its short-term interest rate to around 0.25 per cent from the previous range of zero to 0.1 per cent. In a press conference soon after the decision, Ueda expressed eagerness to hike the target again by the end of the year, saying, "We will raise interest rates further if the economy and prices move in line with our projections." 

--BERNAMA-XINHUA