Former Bank of Japan (BOJ) Official Predicts No Additional Rate Increases This Year
Bank of Japan (BOJ) – In a recent development, former Bank of Japan (BOJ) board member Makoto Sakurai has indicated that the central bank is unlikely to implement further interest rate hikes within this year. This statement provides a glimmer of hope for risk assets, suggesting that market stability is currently prioritized over aggressive monetary tightening.
No Additional Rate Hikes Expected in 2024
Sakurai, speaking late Friday, conveyed to Bloomberg that the BOJ is set to hold off on any further rate hikes for the remainder of 2024. “They won’t be able to hike again, at least for the rest of the year,” Sakurai stated. He added that the possibility of an additional rate hike by March 2025 remains uncertain, emphasizing the central bank’s cautious approach in the face of market instability.
Previous Rate Increase and Market Reactions
On July 31, 2024, the BOJ raised its key interest rate to approximately 0.25%, ending a decade-long period of near-zero rates. This policy shift led to a stronger Japanese yen and caused a significant unwind of “risk-on” yen carry trades. Consequently, traditional risk assets, including Bitcoin (BTC), experienced substantial declines, with BTC falling from around $65,000 to $50,000 in less than a week.
Bitcoin’s Recovery Amid Market Stabilization
Despite the initial shock, Bitcoin has since recovered, trading above $58,000 as market conditions show signs of stabilization. This rebound highlights the cryptocurrency’s resilience amidst shifting macroeconomic conditions and investor sentiment.
BOJ’s Evolving Policy Stance
The recent volatility in the markets prompted BOJ Deputy Governor Shinichi Uchida to retract the bank’s earlier hawkish stance on rate hikes, emphasizing the importance of market stability. Uchida’s comments were seen as a prudent move given the current economic climate. Sakurai echoed this sentiment, noting that maintaining market stability is crucial and criticizing the BOJ for its failure to communicate a consistent easing policy.
Future Monetary Policy Expectations
Sakurai explained that the BOJ is transitioning from a period of excessive monetary easing to a more balanced approach. He criticized current BOJ Governor Kazuo Ueda for not clearly affirming the continuation of easing measures, a stance that has historically been vital for maintaining economic stability.
In conclusion, the BOJ’s cautious approach towards interest rate hikes and its impact on the broader market underscores the delicate balance central banks must maintain between monetary policy and market stability. As the year progresses, market participants will closely monitor any further policy adjustments from the BOJ and their implications for risk assets and the cryptocurrency market.
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