TechFlame News, December 12 — According to three sources, the Bank of Japan may maintain its commitment to continue raising interest rates next week but will emphasize that the pace of further hikes will depend on how the economy responds to each increase.

Bank of Japan Governor Kazuo Ueda has essentially pre-announced a rate hike in December, and the market has almost fully priced in the likelihood of raising rates from 0.5% to 0.75% this month. Market focus has shifted to the extent to which the Bank of Japan can raise rates to a neutral level. Sources said that although the central bank may internally update its estimates of how far its policy rate is from what is considered neutral, it will not use this estimate as a primary communication tool for future rate hike paths due to the difficulty of making precise forecasts.

Instead, the sources indicated, the Bank of Japan will explain that future rate hike decisions will be based on considerations of how past hikes have affected bank lending, corporate financing conditions, and other economic activities. One source stated, "Japan’s real interest rates are very low, which allows the Bank of Japan to continue raising rates in several stages." The other two sources shared the same view. (Jin10)