(Bloomberg) -- Bank of Japan officials see little need to raise the benchmark rate when board members gather next week, as they’re still monitoring lingering volatility in financial markets and the impact of the July hike, according to people familiar with the matter.

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The BOJ is likely to keep borrowing costs unchanged at 0.25% at the Sept. 20 conclusion of its two-day gathering, according to the people. The bank needs to carefully monitor financial markets given recent ructions that include the Nikkei 225’s biggest plunge in history on Aug. 5, just days after the central bank raised its rate, the people said.

Most economists surveyed after the sharpest market moves in August expect the central bank to wait until December or January before raising rates again.

The BOJ’s board will meet after revised figures showed that the economy rebounded at a slightly slower pace than first indicated in the second quarter, but still strong enough to keep the central bank on track to adjust policy settings that remain ultra-easy by global standards even after two rate hikes this year.

With one eye on markets, officials are sticking to their stance that they should raise rates if the economy and inflation continue to meet expectations, the people said.

Recent market turmoil has so far had no major impact on the bank’s view set out in its quarterly outlook report in July, they said. So officials aren’t ruling out another rate hike later this year or in early 2025, depending on the state of the economy and financial markets, the people added.

The yen was trading around 143.01 against the dollar just after 7:10 p.m. in Tokyo, having strengthened from 143.56 when this report was first published.

Deputy Governor Shinichi Uchida last month said the bank won’t raise rates when financial markets are unstable. Another deputy, Ryozo Himino, said the BOJ’s primary task for now is to closely monitor markets.

The possibility that the US economy may prove weaker than expected is a factor officials are keeping an eye on and that suggests the bank shouldn’t rush toward its next rate hike, they said.

BOJ officials are also closely watching domestic political developments as Japan is poised to get a new premier, according to the people. The ruling Liberal Democratic Party’s Sept. 27 leadership election is all but certain to determine who will succeed Fumio Kishida as prime minister, given the party’s dominance in parliament.

BOJ officials don’t expect the new leader to push for drastic change in monetary policy as the ruling party is on board with the bank’s pursuit of its stable inflation target, they said.

As the BOJ raises rates, officials are carefully trying to determine the most appropriate level by examining the impact of each individual rate hike, the people said. For now it’s fine if market participants take the view that the central bank views the nominal neutral rate of interest for the economy at least around 1%, as indicated by a recent BOJ paper, the people said.

The BOJ’s nine-member policy board will kick off its meeting just hours after the Federal Reserve is widely expected to cut interest rates, joining the European Central Bank in a long-awaited policy pivot to easing.

Lower interest rates in the US would narrow the differential with interest rates in Japan, offering support for the yen. BOJ officials will monitor the immediate market reaction with great interest while also checking to see if a US rate cut helps restore stability in the market, the people said.

(Updates with market move)

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