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tomoko amaya, a former senior official at japan's financial services agency, said the bank of japan could still raise interest rates again before the end of the year given that the recent market turmoil, known as "black monday," has yet to have a lasting impact.

“although the market has experienced some turbulence in the past month or two, i don’t think the market has lost confidence,” tomoko amaya said over the weekend.

“what matters is not the level of share prices or the degree of volatility, but the level of confidence. the return of market stability could be enough to make a rate hike possible this year, which would be good for banks,” she added.

if the boj takes such a step, japanese banks would benefit from higher profit margins, amaya said, adding, however, that the pace of rate hikes would be a bigger worry than the level of rates themselves.

“many banks are adjusting themselves and their portfolios to the challenge of rising interest rates. i think there is still room for rate increases. they can benefit from higher rates,” she said.

after serving as the first female deputy director of the financial services agency, she also became the first female deputy director for financial services and international affairs. the fsa is tasked with supervising banks and other financial institutions and ensuring the stability of japan's financial system. after her retirement, she is now an executive advisor at norinchukin research institute.

in july this year, the bank of japan raised its benchmark interest rate from 0% to 0.1% to 0.25%, the second rate hike this year. this accelerated the rebound of the yen and caused the japanese market to collapse. the nikkei index plummeted by more than 12% on august 5, which in turn led to the collapse of the global market. this was also another "black monday" that panicked investors.

since the turmoil, bank of japan deputy governor shinichi uchida has said the central bank will not raise rates when markets are unstable. governor kazuo ueda has largely agreed, but has also said the central bank will continue to raise rates if data shows that japan's economy and prices are in line with the central bank's expectations.

in fact, amaya is not the only one who thinks there will be another rate hike before the end of the year. tsutomu watanabe, a former bank of japan official and one of japan's leading inflation experts, said last week that the bank of japan may raise interest rates faster than everyone expects, and there may be two more rate hikes this year.

he explained that while price trends had not strengthened, the boj’s key assertion that inflation was “on track” meant the central bank could essentially act at any time.

as warnings continued to sound, the market became increasingly concerned that "black monday" would return. moreover, japanese stocks were volatile again on monday. the nikkei 225 index fell 1.61% at the opening, and then the decline quickly expanded, once expanding to more than 3%, and finally closed down 0.48%.

kathy lien, managing director of foreign exchange strategy at bk asset management, said she expects the unwinding of yen carry trades to continue in september, creating the risk of another large-scale sell-off.