In a critical assessment of Japan’s monetary trajectory, a former Bank of Japan (BOJ) official has projected that the central bank is likely to forgo additional interest rate increases for the remainder of the year, prioritizing market stability in the near term.

“They won’t be able to hike again, at least for the rest of the year,” remarked Makoto Sakurai, an erstwhile board member of the BOJ, during a late Friday discussion, as reported by Bloomberg. “It’s uncertain whether they can implement another hike by March next year.”

This cautious outlook follows the BOJ’s recent decision to elevate its key interest rate to approximately 0.25% from a longstanding range of zero on July 31, marking the first increase in over a decade. The central bank had also hinted at the possibility of further rate hikes, signaling a significant shift in its monetary stance.

The departure from the zero interest rate policy exerted upward pressure on the Japanese yen, leading to a reversal of the “risk-on” yen carry trades. This abrupt adjustment in currency dynamics catalyzed a sharp decline in traditional risk assets, with Bitcoin (BTC) plummeting from around $65,000 to $50,000 within a span of less than a week.

However, Bitcoin has since staged a recovery, trading above $58,000 amid indications of a risk reset on Wall Street. The financial tumult prompted BOJ Deputy Governor Shinichi Uchida to temper the central bank’s previously hawkish tone, emphasizing that rate hikes would be deferred if market conditions remain unstable.

“Sakurai endorsed Uchida’s stance, asserting that ‘Uchida’s remarks were appropriate because market stabilization is very important now.’ He elaborated that the BOJ is transitioning from an era of excessive monetary easing to a more measured approach, but criticized BOJ Governor Kazuo Ueda for failing to clearly communicate the bank’s commitment to maintaining easing policies—a critical condition that has been consistently upheld by the BOJ.”

As the global financial landscape continues to navigate through volatility, the BOJ’s cautious approach underscores the delicate balance central banks must strike between monetary tightening and ensuring market equilibrium.