Japan’s central bank is tapping the brakes on further interest rate hikes, prioritizing market stability over aggressive monetary tightening. Former Bank of Japan (BOJ) board member Makoto Sakurai disclosed that any additional rate increases will likely be deferred until next year, suggesting a cautious approach amid market volatility.

The BOJ recently raised its key interest rate to 0.25%—a historic move after over a decade of near-zero rates. While this decision initially signaled a shift towards tightening, market reactions led Deputy Governor Shinichi Uchida to soften the bank’s stance, emphasizing that further hikes are off the table if market instability persists (can't taper a Ponzi).

Sakurai commended this approach, highlighting the importance of clear communication and stability during this transition. He pointed out that the BOJ is gradually moving from excessive monetary easing to a more balanced approach, but the central bank’s failure to clearly convey its commitment to maintaining easing measures could pose challenges.