• BOJ may hike rates again; yen peaks at 145.61 against USD amid global currency downtrends.

  • BOJ's Ueda confirms rate strategy as economic stability supports Japan's growth.

  • Post-July BOJ rate hikes, majority economists foresee another increase by year-end.

Bank of Japan (BOJ) Governor Kazuo Ueda reiterated on Tuesday that the central bank may continue raising interest rates if economic conditions and inflation align with its expectations. 

This declaration came through a document submitted to a government panel led by outgoing Prime Minister Fumio Kishida, where Ueda reviewed the outcomes of the BOJ's July policy decision. His remarks further strengthened the yen, contrasting the general downtrend among G-10 currencies.

https://twitter.com/GlobalMktObserv/status/1830915909608714292 Impact on Currency and Market Predictions 

Following Ueda's statements, the yen saw a notable increase, peaking at 145.61 against the dollar by late afternoon in Tokyo. This rise is particularly significant as it counters the recent weakening trend observed in other major global currencies. 

Market analysts highlight that Ueda's consistent policy stance is crucial amid the volatile economic climate caused by the BOJ's previous rate adjustments. A survey of economists during the post-market downturn showed that a majority still anticipate an additional rate increase by the end of this year, with a significant portion pointing towards December.

Economic Indicators and Future Outlook

Economic Resilience Governor Ueda emphasized that Japan's economic environment remains conducive to growth despite the rate hikes in July, with real interest rates still markedly negative. He argued that the current monetary conditions robustly support ongoing economic activities, suggesting a careful but determined approach to future policy adjustments.

The BOJ governor's firm stance comes when market experts, such as Arif Husain from T. Rowe Price, warn of potential further volatility in the financial markets. Meanwhile, Pacific Investment Management Co. (Pimco) predicts the next rate hike as early as January, advocating for investments in long-term government bonds, which are becoming more appealing as yields rise.

Collaboration and Communication in Economic Policy

During the same meeting, four private-sector government panel members, including Masakazu Tokura of the business lobby Keidanren, proposed the need for steady macroeconomic management. 

This comes after last month's market disturbances, emphasizing the importance of ongoing collaboration and clear communication between the BOJ and government officials to maintain market stability.

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