BoJ’s Himono: The financial and capital markets remain unstable

FXStreetAug 28, 2024 5:13 AM

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The Bank of Japan (BoJ) Deputy Governor Ryozo Himino said on Wednesday that the financial and capital markets remain unstable and the Japanese central bank needs to monitor these developments with utmost vigilance.

Key quotes

The financial and capital markets remain unstable.

The BoJ needs to monitor these developments with utmost vigilance.

BoJ also intends to carefully examine the impact these market.

Developments at home and abroad have on the outlet for economic activity and prices, the risks surrounding the outlook, and the degree of confidence in the outlook.

BoJ will adjust the degree of monetary accommodation if it has growing confidence that its outlook for economic activity and prices will be realized.

Will conduct monetary policy as appropriate to achieve the 2% inflation target in sustainable and stable manner while closely communicating with market participants and other stakeholders.

Needs to closely monitor developments in recent market volatilities including weaker stocks and stronger Yen.

BoJ should continue its efforts to refine its approaches to estimate the neutral rate for Japan, and use the results as a useful point of reference.

But BoJ has no other choice but to chart a way forward examining how the economy and prices respond as it conducts monetary policy.

Estimation of the neutral interest rate would not automatically show the right policy path for Japan, at least at the moment.

Our baseline scenario for fiscal year 2025, 2026 envisions a reasonably balanced state where the inflation rate is consistent with the price stability target, and the economic growth is slightly above cruising speed.

The Yen recent appreciation may alleviate the import cost hike and profit squeeze many small and medium-size firms currently face.

But stronger Yen may lower the yen denominated profits of export industries and Japanese multinationals.

Market reaction

At the time of writing, the USD/JPY pair is trading 0.13% higher on the day to trade at 144.15.

Reviewed byTony

Disclaimer: The content of this article solely represents the author's personal opinions and does not reflect the official stance of Tradingkey. It should not be considered as investment advice. The article is intended for reference purposes only, and readers should not base any investment decisions solely on its content. Tradingkey bears no responsibility for any trading outcomes resulting from reliance on this article. Furthermore, Tradingkey cannot guarantee the accuracy of the article's content. Before making any investment decisions, it is advisable to consult an independent financial advisor to fully understand the associated risks.

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