Bank of Japan board members were satisfied with market reaction to the central bank’s first interest rate rise in six years and said they had no preconceived timetable for further increases, minutes of last month’s meeting showed on Wednesday.

The nine member board said the economy and prices were developing broadly in line with the bank’s central scenario, meaning they were likely to keep very low interest rates for some time.

Expectations that the bank was gearing up for another rate rise this year, perhaps as early as October, have faded since last month’s meeting, largely as a result of subsequent weak data.

These include an unexpectedly big revision of inflation, which showed that core consumer prices, excluding fresh food, were rising at only 0.2 per cent in July. Weak production and machinery-order data also have added to a sense the economy, in its longest recovery since the second world war, may be slowing.

Jesper Koll, economist at Merrill Lynch in Tokyo, said the minutes showed the bank was in “no rush to raise interest rates”. Subsequent data meant that it was probably now in even less of a rush, he said.

However, Mr Koll said the domestic economy remained solid and that it would be wrong to conclude from volatile monthly data that the economy was running into problems.

Financial conditions, including a depreciation of the yen, had improved the environment since the rate rise, meaning there was no likelihood of a slowdown in capital spending.

The labour market, as measured by jobs to job applicants, also remained extremely tight, Mr Koll said. If there was any danger, it came from the external side, particularly a slowdown in the US, he said.

In its minutes, the board noted that the economy had slowed in the second quarter, when revised figures showed that growth domestic product grew at an annualised 1 per cent.

However, the board said: “The economy was expanding moderately, with domestic and external demand and also the corporate and household sectors well in balance.” The bank “expected the economy to continue to expand moderately.”

The board acknowledged market speculation that the bank wanted to raise rates again this calendar year. It said it was “important that the bank explain carefully that the timing of any policy changes depended on developments in economic activity and prices and that it had no predetermined view regarding the future path of monetary policy.”

By Wednesday, the yield on the 10-year bond had fallen to 1.680, far below the near 2 per cent reached when speculation of an early second rate rise was rife. Interest rate futures suggest the market is now factoring in a rate rise in the first quarter of next year.

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