The governor of the Bank of Japan, Kazuo Ueda, reiterated today that policymakers intend to continue tightening monetary policy if the economic situation and inflationary trends develop in accordance with the forecasts of the Central Bank. These comments provided significant support for the national currency - the USD/JPY fell by 0.7%, offsetting yesterday's increase (+0.51%), and retreating from a 2-week high.
Ueda's statements also indicated that despite the recent collapse in global markets, the Central Bank has not abandoned its plans. About two-thirds of economists surveyed after the slide in markets last month still believe that the Bank of Japan will raise the rate again by the end of the year, with 41% of respondents predicting a tightening of monetary policy in December.
As for the economic situation in Japan, Ueda again pointed out that the economic environment remains favorable, even after the rate hike in July, while real interest rates continue to remain significantly negative. He added that current rates provide reliable support for economic activity.