Earlier this month, Hayami defied an unprecedented government request and led the BOJ Policy Board to end its 18-month emergency policy of driving short-term rates essentially to zero. While stressing that the economy was clearly recovering, Hayami, appearing upbeat and confident as he addressed business leaders in the western Japan city of Osaka, gave no direct hints on the recently debated point of when the next rate hike might come. "Regarding what would be our next step, I cannot comment on what might happen in the future," he told a news conference after the speech. "But we will maintain our easy monetary policy to ensure stable prices and to support the economic recovery." Hayami reiterated that the end of zero rates did not amount to the start of a tightening policy. But some economists now speculate the BOJ's bullishness on the economy may signal another rate rise is in the cards before the end of the year.

Hayami also appeared pleased with the financial markets' reaction to the BOJ's move to raise rates. "The markets have reacted very calmly. Recent stock price movements are relatively stable," he said. Although he acknowledged long-term interest rates have risen somewhat, he added: "Long-term rates are inevitably going to rise as the economy recovers." Hayami reiterated that Japan has emerged from the risk of deflation, saying employment and job conditions are improving while corporate capital spending is improving strongly.

-- (Reuters)