Bank of Japan Deputy Governor Nobuyuki Sato said on Thursday that the central bank would consider raising interest rates if the committee had "greater confidence" in achieving its economic and price forecasts.

Sato noted that the Bank of Japan would decide when to raise interest rates based on the "overall" data published at each policy meeting.

"We are not on a pre-set course," Sato said, adding that the Bank of Japan would "carefully assess the upcoming data, changing outlook, and balance of risks at each meeting."

He stated that the types of data the Bank of Japan focuses on when formulating monetary policy vary and change over time. He pointed out that U.S. employment and consumption data, as well as Chinese consumption data, may warrant more attention than before.

"Later this year, we will obtain more data on the impact of this year's wage increases on service prices, as well as qualitative and quantitative information related to the 2025 wage negotiations," Sato said.

He added that the Bank of Japan would also receive more data on how exchange rate movements affect inflation through import prices, and the list of data to be monitored is "constantly changing."

Advertisement

Sato said that although statistical data for the entire fiscal year will only be released after the end of the year, the Bank of Japan does not necessarily have to wait until then to determine whether the Japanese economy is ready for further interest rate hikes.

"It is more important that we monitor data to identify developments not yet covered in our risk scenarios. It is equally important to look at data beyond the current priority list," Sato said.

The Bank of Japan ended negative interest rates in March and raised short-term lending rates to 0.25% in July, as it believes it has made progress in consistently achieving its 2% inflation target.

Bank of Japan Governor Haruhiko Kuroda has hinted that the central bank is prepared to continue raising interest rates if the economic and price trends align with the Bank of Japan's expectations.However, he also indicated that the Bank of Japan has "ample time" to carefully study risks such as market instability and uncertainties in the U.S. economy to determine the timing of the next rate hike.

The market widely expects the Bank of Japan to keep interest rates unchanged at its next meeting on October 30-31. However, as Japan's economic conditions improve and concerns about a U.S. economic recession subside, the prospect of the Bank of Japan raising interest rates in December or January next year has re-emerged.