Shigeta Kazuo: Corporate prices rising in April are a key consideration for interest rate increases. The central bank will flexibly respond to the surge in bond interest rates.

The Bank of Japan announced on Friday that it would maintain interest rates, while raising economic growth expectations and retaining a hawkish inflation forecast. This indicates that the central bank is confident in the moderate recovery of the Japanese economy, providing reasonable support for further raising the current benchmark interest rates, which are still at a low level. At the two-day monetary policy meeting ending on January 23, the Bank of Japan announced that it would keep the policy interest rate at 0.75%, a decision that was in line with market expectations. The central bank had previously raised the benchmark interest rate from 0.5% to the current level in December of last year. During the subsequent press conference, Governor Haruhiko Kuroda stated that the extent of price increases by companies at the beginning of the new fiscal year in April would be a factor to consider when discussing potential interest rate hikes. He also pointed out that the specific path and pace of rate hikes would depend on the economic, price, and financial market conditions at that time. Furthermore, when asked about the recent turmoil in the bond market due to the spike in long-term bond yields to a ten-year high, Kuroda stated that the Bank of Japan may take flexible measures to stabilize the bond market. The following are excerpts from Kuroda's remarks at the post-meeting press conference: Impact of previous rate hikes "It has only been a short time since the rate hike in December of last year, and companies' funding needs are still gradually increasing, while banks' lending attitudes remain positive...Japan's current financial environment remains accommodative. Assessing the actual impact of the previous rate hikes will take time, and we will closely monitor the subsequent economic trends." Path and pace of rate hikes "If the economic and price trends meet our expectations, the Bank of Japan will continue to implement rate hikes. As for the specific path and pace of rate hikes, it will depend on the economic, price, and financial market conditions at that time. We will carefully analyze the latest data at each monetary policy meeting and dynamically update our assessments of economic and price trends, potential risks, and the likelihood of achieving our targets." Recent rise in long-term interest rates "The current long-term interest rates are rising at a fairly fast pace...As we have emphasized before, the Bank of Japan is prepared to take flexible measures to address abnormal fluctuations. We will maintain close communication with the Japanese government, each carrying out their respective responsibilities and coordinating response measures."