HAKODATE: The Bank of Japan “will not raise interest rates when financial markets are unstable,” BOJ Deputy Governor Shinichi Uchida said Wednesday.

The central bank “needs to firmly continue monetary easing at the current level for the time being,” he said in a lecture meeting in Hakodate, Hokkaido, northern Japan.

On a recent plunge of stock prices and the yen’s rebound, Uchida said that the BOJ “will keep a close watch (on market developments) with an extremely high sense of tension and respond appropriately in monetary policy steering.”

At the end of July, the BOJ decided to raise its target for the unsecured overnight call rate, Japan’s benchmark short-term interbank lending rate, to around 0.25 pct from a range of around zero to 0.1 percent.

As to whether the central bank will raise the policy rate target further, Uchida said, “The significant movements in stock prices and foreign exchange rates over the past week will affect” a monetary policy decision.

Stock price fluctuations are “a key factor in monetary policy management,” Uchida said, adding, “The (recent) correction of the yen’s depreciation will affect monetary policy steering.”

JIJI Press