While further developments in the U.S. and European financial markets need to be monitored closely, it seems unlikely that this particular problem will pose a significant threat to the stability of Japan's financial system.
Nevertheless, recognizing increasing volatilities in world oil prices and interest rates, the BSP responded to changing monetary conditions and allowed the term deposit facility (TDF) rates to rise. Market rates have correspondingly risen. Our two successive policy rate hikes in May and June were measured and deliberate responses to the evolving economic environment and dynamic market conditions.