“If we can confirm increasing certainty that the economy and prices will remain in line with forecasts, there will be no change in our stance that we will continue to adjust the degree of easing,” Ueda said in response to questions in parliament on Friday.
Asked about the market turmoil that occurred earlier this month, Ueda cited concerns over the state of the U.S. economy as a key catalyst, adding that “exaggerated” concerns related to the U.S. economy have since eased.
Still, Ueda said he does not plan to rush the next rate hike and reiterated the need to carefully monitor the impact of unstable financial markets on the inflation outlook for the time being.
The governor’s remarks point to a relatively hawkish stance that downplays the impact of the BOJ’s rate hike in triggering the turmoil in financial markets in early August. The comments suggest that such financial turmoil will not deter policymakers from considering further hikes in the future, even if the next move is not imminent.
The yen extended its gains against the dollar as the central bank chief spoke, touching the 145.60 mark just after 10:45 a.m. in Tokyo.
“For the time being, we will be watching financial markets with an extremely high sense of urgency,” he said.
While the BOJ is widely expected to keep monetary policy unchanged when the board meets in September, many economists expect the bank to raise borrowing costs again in December, according to a survey conducted earlier this month.
Ueda pledged to carefully communicate the bank’s thinking to ensure market participants are not caught off guard.
The BOJ has come under fire from observers who said the July 31 hike and Ueda’s post-decision pledge to continue raising rates if conditions permit were key factors triggering a sell-off in global financial markets days later.
At its July meeting, the BOJ raised its benchmark rate to 0.25% from a range of 0% to 0.1%, its second increase this year.
The following week, Shinichi Uchida, vice governor, attempted to restore calm by saying the BOJ would not raise rates at a time when financial markets were unstable.
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