Ex-Bank of Japan Official Rules Out Another Rate Hike This Year

• Makoto Sakurai ruled out additional rate hikes this year, offering hope to risk assets.

• The next move may come in March 2023, the official said

A former Bank of Japan (BOJ) official said the central bank would defer additional interest rate hikes to next year, suggesting a preference for market stability over the near term.

“They won’t be able to hike again, at least for the rest of the year,” former board member Makoto Sakurai said late Friday, according to Bloomberg. “It’s a toss up whether they can do one hike by next March.”

The BOJ raised its key interest rate to about 0.25% from a range of zero on July 31, delivering the first hike in over a decade. The central bank also signaled additional rate hikes.

The shift away from the zero interest rate policy pushed the Japanese yen higher, triggering an unwinding of the “risk-on” yen carry trades. The resulting slide in traditional risk assets weighed heavily over BTC, crashing the cryptocurrency from roughly $65,000 to $50,000 in less than seven days.

Bitcoin has since recovered to trade above $58,000 amid signs of risk reset on Wall Street.

The market turmoil saw BOJ’s Deputy Governor Shinichi Uchida walk back on the bank’s hawkish commitment, saying it wouldn’t hike rates when the markets are unstable.

“Uchida’s remarks were appropriate because market stabilization is very important now,” said Sakurai.

“The BOJ is moving from excessive monetary easing to appropriate monetary easing, and the biggest problem is that Ueda failed to communicate firmly they will maintain easing. That’s always been a condition they’ve kept,” Sakurai added.