By Leika Kihara and Makiko Yamazaki
(Reuters) -Bank of Japan Governor Kazuo Ueda said on Friday the central bank stood ready to raise interest rates if the economy and prices move in line with its forecast, while keeping a close eye on market developments.
Ueda said the BOJ would remain vigilant to market moves and their impact on the central bank’s growth and price forecasts, as well as its view on risks.
While watching the fallout from recent market volatility, Ueda said there was “no change to our basic stance to adjust the degree of monetary easing” if the bank became convinced that economic and price developments were moving in line with forecasts.
Ueda said the market volatility seen in early August was due to rising fears of a U.S. recession, stoked by the country’s weak economic data, while the BOJ’s interest rate hike in July led to a sharp reversal of “one-sided yen falls”.
“Markets at home and abroad remain unstable, so we will be highly vigilant to market developments for the time being,” Ueda said in parliament, where he was summoned to explain the BOJ’s decision in July to raise interest rates.