Japanese stocks lead the global market down, testing the determination of the Bank of Japan to raise interest rates. Today, senior officials of the Bank of Japan made speeches to reassure the market.
At 9:30 on Wednesday morning, Bank of Japan Deputy Governor Shinichi Uchida will give a speech and hold a press conference. He will provide detailed comments on how the rapid rise of the yen and the stock market crash since the last meeting will affect the economic outlook envisioned in the Bank of Japan's quarterly outlook report.
Shinichi Uchida reassured the market by stating:
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Recent fluctuations in the stock and foreign exchange markets have had an impact. If market volatility affects the outlook, the interest rate path will change.
The Bank of Japan will not raise interest rates when the market is unstable, and currently, it is necessary to firmly implement loose monetary policy.
If the outlook becomes a reality, adjustments will be made to the degree of looseness. In terms of interest rates, there is no lag behind the situation, and we are closely monitoring the market's impact on the economy with a sense of urgency.
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After the speech was released, the USD/JPY rose in the short term, breaking through the 147.00 level, with an intraday increase of 2%. The Nikkei 225 index in Japan expanded its gains to 4%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c8cf06d6-d4a9-4b4d-9498-551d49e51006.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c8cf06d6-d4a9-4b4d-9498-551d49e51006.png"/>
It is worth mentioning that Shinichi Uchida is seen as the planner of the Bank of Japan's interest rate path and communication. In a speech in February, Uchida proposed a plan for the Bank of Japan to unwind a series of complex stimulus measures, laying the foundation for the Bank of Japan's decision a month later.
On the eve of the speech, former Bank of Japan board member Takahide Kiuchi stated that given the recent market turmoil, Uchida is likely to convey a message aimed at calming the market's anxiety about the Bank of Japan's interest rate path.
Morgan Stanley previously warned that if Uchida maintains a hawkish stance and does not take any control measures on the current yen and stock market trends, it is expected that the Japanese stock market will further decline. The market expects more rate hikes in the future, and further unwinding of yen carry trades will push the yen higher.
In addition, later this month, Bank of Japan Governor Haruhiko Kuroda may attend a special session of the Japanese parliament to discuss the issue of the sharp decline in Japanese stocks

The Bank of Japan's previous rate hike triggered the unwinding of yen carry trades, leading to a global market crash. Market reassurance from Shinichi Uchida stated that there would be no rate hikes during market instability. The USD/JPY rose above the 147.00 level, while the Nikkei 225 index expanded its gains to 4%

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