Bank of Japan Deputy Governor reiterates rate hike when conditions allow, but avoids discussing timing

　　Bank of Japan Deputy Governor Shinichi Himino reiterated the central bank’s current policy on Tuesday: if conditions permit, the benchmark interest rate will be raised, but he did not disclose when a rate hike might occur, causing the yen to weaken.

　　Speaking to local business leaders in eastern Hokkaido on Tuesday, he stated that the Bank of Japan should continue to raise policy interest rates and adjust the degree of monetary easing based on improvements in economic activity and prices.

　　Since Shinichi Himino’s remarks lacked a strong hawkish tone, the yen weakened against the US dollar. Shortly after his speech, the yen traded at around 147.65 against the dollar.

　　Wells Fargo Chief Asia Pacific Strategist in Singapore, Chidu Narayanan, said that the next step is still a rate hike, but the timing remains uncertain. After Himino’s speech, market expectations for a Bank of Japan rate hike this year declined slightly, which may put pressure on the yen.

　　As traders scrutinize comments and data for any potential clues about the timing of the next rate hike, market pricing reflects about a 70% chance of a rate hike before the end of the year.

　　The deputy governor avoided sending a clear signal, keeping all options open. This approach suggests that the Bank of Japan is unlikely to take action at its next policy meeting on September 19, although many expect a rate hike may occur in October.