BoJ's Uchida says rates won't rise when markets unstable

(Sharecast News) - Bank of Japan deputy governor Shinichi Uchida said the central bank would not lift interest rates when the markets are unstable, in response to this week's volatility that saw a massive sell-off in equities. The yen weakened by more than 2% against the dollar while bond futures rose and equities rallied after Uchida's comments.

"I believe that the bank needs to maintain monetary easing with the current policy interest rate for the time being, with developments in financial and capital markets at home and abroad being extremely volatile," Uchida told business leaders in a speech.

He added that the BoJ's interest rate path would "obviously" change if market volatility affected its economic and price outlook, its view on risks, and the likelihood of durably achieving its 2% inflation target.

"In contrast to the process of policy interest rate hikes in Europe and the United States, Japan's economy is not in a situation where the bank may fall behind the curve if it does not raise the policy interest rate at a certain pace," Uchida said.

"Therefore, we won't raise interest rates when financial markets are unstable," Uchida said.

Reporting by Frank Prenesti for Sharecast.com