The Bank of Japan¡¯s (BOJ) big policy shift this week makes another interest rate hike highly likely in October and raises the potential for quarterly increases, according to a former executive director of the bank in charge of monetary policy.
¡°The chances are very high for an October rate hike,¡± Kazuo Momma, the former BOJ director, said on Thursday. ¡°The BOJ¡¯s policy reaction function has changed now. This means of course that there¡¯s also a chance of another hike in January.¡±
Momma¡¯s remarks are likely to fuel the recalibration of views among BOJ watchers on the likely path of interest rates following Wednesday¡¯s hawkish signals as the central bank raised borrowing costs for the second time this year.
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