Although the Japanese stock market just experienced the tragedy of "Black Monday" earlier this month, the determination of the Bank of Japan to raise interest rates seems to remain unshaken.

On this Friday, Bank of Japan Governor Haruhiko Kuroda stated during a parliamentary inquiry that if Japan's inflation and economic data continue to meet the central bank's expectations, the Bank of Japan will continue to raise interest rates.

Kuroda continues to send hawkish signals.

In July of this year, the Bank of Japan raised the benchmark interest rate from the range of 0% to 0.1% to 0.25%, marking the second interest rate hike this year.

Due to Kuroda's hawkish signals at the time, the yen surged, causing the Japanese market to crash earlier this month and the Nikkei index to plummet more than 12% on August 5th, resulting in the 'Black Monday' tragedy and even shaking global markets.

This also prompted the Bank of Japan's Deputy Governor to make an emergency statement, calming market sentiment and stating that the Bank of Japan will not rashly raise interest rates during periods of market turbulence.

However, as market turbulence gradually subsides, Kuroda once again sent hawkish signals in his speech on this Friday.

Ueda believes that in the market turbulence at the beginning of this month, the market's concerns about the US economic situation were a key catalyst. Now, the market's "excessive" concerns about the US economy have eased, which also means that the risk of market turbulence has decreased.

"If we can confirm that the economy and prices will remain consistent with the forecasts, our stance will not change and we will continue to adjust policies," said Ueda and Oto.

However, Ueda and Oto also implied that they do not intend to rush into the next rate hike. He reiterated that the Bank of Japan needs to temporarily observe and confirm the impact of financial market volatility on inflation prospects. He said, "We will pay close attention to the financial markets with a very high sense of urgency."

This indicates that even after experiencing financial market volatility in early August, the Bank of Japan's stance remains relatively strong.

Expected to raise interest rates again before the end of the year

Ueda's remarks indicate that the risk of financial turmoil will not prevent the Bank of Japan from considering further rate hikes in the future, even if the next rate hike is not imminent.

After Mr. Ueda's speech, the yen continued to rise against the US dollar. As of press time, the yen rose by over 0.4% against the US dollar, hovering around 145.70 yen to 1 US dollar. In contrast, in early July, the yen once fell below the 161 yen mark against the US dollar, hitting a new low in 38 years.

Although the market generally expects the Bank of Japan to maintain its policy at the September meeting, according to a survey conducted earlier this month, many economists expect the Bank of Japan to raise interest rates again before December.

In his speech, Ueda promised that the Bank of Japan will closely communicate with the market to ensure that market participants will not be surprised by the Bank of Japan's policy decisions, thus avoiding causing another major impact on the market.

Editor/ping