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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