Bank of Japan Official Suggests No Rate Hikes During Market Volatility
Tokyo, Japan - The Nikkei 225 index closed 1.2% higher on Wednesday after a Bank of Japan official suggested the central bank would refrain from raising interest rates during periods of market volatility.
The Nikkei index bounced during the day and ultimately gained more than 400 points to close at 35,089.62. This follows a 10% surge on Tuesday, recovering a large share of the losses suffered on Monday, which was the worst day for the index since 1987.
The gains followed remarks by Bank of Japan Vice Governor Shinichi Uchida, who noted that despite the recent interest rate hike, monetary policy remains lax. The central bank raised interest rates from 0.1% to 0.25% last week, triggering a sell-off by traders adjusting to higher costs for carry trades.
Uchida acknowledged recent market turmoil, partly caused by concerns over the U.S. economy. However, he expressed confidence in a "soft landing" for the U.S. and said the Bank of Japan would not raise rates during periods of financial and capital market instability.
His comments were seen as a calming influence on jittery markets, effectively signaling continued intervention by the central bank.
Other Market Movements
The Hang Seng index in Hong Kong erased early losses and rose 1.2%.
The Shanghai Composite index gained 0.1%.
South Korea's Kospi jumped 1.8%.
The benchmark index in Taiwan surged 3.9%.
Australia's S&P/ASX 200 rose 0.3%.
U.S. Markets Rebound
On Tuesday, the S&P 500 climbed 1%, breaking a three-day losing streak. The Dow added 0.8% and the Nasdaq gained 1%.
The rebound followed concerns that the Federal Reserve's aggressive interest rate hikes might be slowing the U.S. economy too quickly. However, many economists still believe a recession is unlikely in the next year.
Other Market Developments
U.S. benchmark crude oil picked up 2 cents to $73.22 per barrel.
Brent crude, the international standard, added 5 cents to $76.53.
The euro fell to $1.0926 from $1.0928.