After the Bank of Japan (BOJ) kept its interest rates unchanged today, the governor of the BOJ stated that the inflationary risks are diminishing, and "the Bank of Japan will continue to raise interest rates," without revealing the specific timing of the next rate hike.

At 14:30 Beijing time on the afternoon of the 20th, BOJ Governor Haruhiko Kuroda announced at a press conference that the Japanese economy is recovering moderately, and it is necessary to observe the impact of market trends on the economy and inflation.

This morning, as expected, the BOJ paused interest rate hikes, unanimously passing the latest interest rate decision with a 9-0 vote, maintaining the policy interest rate level unchanged in the range of 0.15%-0.25%, in line with market expectations.

Kuroda stated that if the trends in the economy and inflation align with the central bank's outlook, the BOJ will continue to raise interest rates.

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The US dollar against the Japanese yen surged by about 70 pips, currently trading at 143.16, after earlier falling by about 0.6%.

Kuroda pointed out the need to monitor the impact of market trends on the economy and financial markets, and is currently keeping a watchful eye on the market.

"Real interest rates are at very low levels, and the inflationary risks associated with the weakening yen have eased," he said, adding that uncertainties in the U.S. economy were key factors causing market turmoil in early August.

He anticipates wage increases in the spring negotiations next year, stating that "the BOJ will closely monitor whether wage growth is sustainable and will carefully observe whether the U.S. economy achieves a soft landing."

Kuroda also indicated that caution is needed when raising interest rates near the neutral rate.

"Monetary policy will not directly control foreign exchange.

The current uncertainties will not lead us to decide on a rate hike quickly."

Inflation data released this morning was slightly stronger than expected.

The data showed that Japan's CPI rose by 3% year-on-year in August, higher than the previous value of 2.8%.

Core CPI, excluding fresh food, rose by 2.8% from the previous year, accelerating from the 2.7% inflation in July.

Valentin Marinov, strategist at Credit Agricole, said: "The BOJ's patience, coupled with the recent improvement in risk sentiment (thanks to the Fed's dovish stance on Wednesday), may put pressure on the yen as investor risk appetite and carry trades may return.

This could mean that the yen's performance may lag behind high-yielding currencies like the British pound."

Jane Foley, strategist at Rabobank, said: "These remarks could help stabilize the dollar/yen after weeks of volatility.

While Japanese officials are undoubtedly relieved by the shift in the dollar/yen trend, they are also likely to be cautious about the impact of a rapid appreciation of the yen."