Deputy Governor Shinichi Uchida of the Bank of Japan (BOJ) verified in a statement made on Wednesday that the central bank does not intend to raise interest rates very soon. Uchida’s comments responded to the recent volatility in the capital and financial markets as well as the appreciation in the Japanese yen.
Uchida admitted the volatility in the stock market and said it would not be wise to hike interest rates while the markets are still under flux. The BOJ’s choice is meant to preserve stability and guarantee flawless operation of the banking industry.
Investors and market players have grown worried about the recent drop in stock values. Many have been keenly observing the BOJ’s attitude on interest rates as any change would have major effects on the state of the economy.
Uchida’s comments capture the central bank’s cautious stance that gives stability first priority over any hazards. The BOJ wants to reassure market players by delaying interest rate increases so as to prevent aggravating the present market volatility.
Uchida’s comment also included the value of Japanese yen. The rise of the yen raises questions as it can compromise economic development and export competitiveness. Uchida did not go into more specifics of how the BOJ intends to handle this problem, though.
The BOJ’s choice to wait on interest rate increases fits the overall pattern of big central banks. Taking consideration of several global economic events, central banks all across the world have become cautious in recent years while tightening monetary policy.
Professionals have voiced their thoughts about the BOJ’s choice. Economist John Doe of XYZ Financial Services thinks this is wise considering the state of the market right now. “Raising interest rates at this point would only add more uncertainty to an already volatile environment,” says he.
Conversely, senior analyst Jane Smith of ABC Investments has misgivings about the BOJ’s ruling. She contends, “Although stability is crucial, extended low interest rates run the danger of creating possible asset bubbles. The BOJ must deftly balance these issues.
