BOJ

Japan's economy has recovered moderately, although some weakness has been seen in part. The year-on-year rate of increase in the CPI (all items less fresh food) has been at around 2.5 percent recently, as services prices have continued to rise moderately.Inflation expectations have risen moderately.

According to the Bank of Japan's (BOJ) Summary of Opinions at the July 31 Monetary Policy Meeting, several members said that the small rate hike is an adjustment to the degree of monetary easing and will not have monetary tightening effects. Some believe that as the level of the neutral rate seems to be at least around 1 percent, in order to avoid rapid hikes in the policy interest rate, the BOJ needs to raise the policy interest rate in a timely and gradual manner.

On August 7, Bank of Japan (BOJ) Deputy Governor Uchida Shinichi said that the BOJ will not raise interest rates when financial and capital markets are unstable and it needs to maintain monetary easing.

The employment and income situation had improved moderately. Inflation expectations had risen moderately.Japan's economy had recovered moderately, although some weakness had been seen in part.

The Bank of Japan raised its policy rate unexpectedly by 15 basis points to 0.15%-0.25% on Wednesday. If the positive outlook for economic activity and inflation continues, the BOJ will accordingly continue to raise the policy interest rate.