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currently, most bank of japan observers believe that if market instability does not reappear, the bank of japan will raise interest rates again before january. in the past two weeks, japan's economic data have performed better than expected.

a former senior official at japan's financial regulator said the bank of japan could still raise interest rates again before the end of the year given that market turmoil since early august has no lasting impact.

recently, tomoko amaya, executive consultant of norinchukin research institute and former senior official of japan's financial services agency, said: "although the market has experienced some turbulence in the past month or two, i don't think the market has lost confidence." she said that the most important thing at the moment is not the stock price level or the degree of turbulence, but the level of market confidence.

she believes that the market has now regained enough stability so the bank of japan is still likely to raise interest rates this year, which would benefit banks.

following last month's market turmoil, bank of japan deputy governor shinichi uchida said the central bank would not raise interest rates when markets were unstable. on august 23, bank of japan governor kazuo ueda supported the deputy governor's stance and said the bank of japan would continue to raise interest rates if data showed that japan's economy and prices were in line with the central bank's expectations.

currently, most bank of japan watchers believe that the bank of japan will raise interest rates again before january if market instability does not re-emerge.

in the past two weeks, japan's economic data have performed better than expected. according to wall street journal, japan's real income in june returned to positive for the first time in 27 months, and domestic demand rebounded in the second quarter, giving the bank of japan the confidence to continue raising interest rates; but the gap between japan's commodity inflation and service inflation shows that wage increases have not yet been effectively and comprehensively transmitted to the demand side.

if the bank of japan does raise rates, japanese banks will benefit from higher profit margins, amaya said, adding, however, that the pace of rate hikes is more of a concern than the level of rates themselves.

“many banks are adjusting themselves and their portfolios to face the challenges of higher interest rates,” amaya said. “i think there is still room for higher interest rates and they can benefit from that part of the rate hike.”

since the beginning of this month, the usd/jpy exchange rate has continued to fall and is now at 143.35 yen.