(Bloomberg) — Bank of Japan Governor Kazuo Ueda said that the central bank will make a decision over hiking rates in next week’s closely watched January policy meeting.
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The US economy and the momentum toward spring wage negotiations remain key points, Ueda said in a speech Wednesday at an event hosted by the Regional Banks Association of Japan. The governor said he heard many encouraging views on pay during new year events at various industries, and at the BOJ’s recent branch managers’ meeting.
Following Ueda’s comments, the yen strengthened as much as 0.2% to 157.67 against the dollar, after earlier hovering around the 158 level.
Ueda’s latest comments come as BOJ watchers seek clues about the possibility of a rate hike in the lead-up to the Jan. 23-24 policy meeting. Overnight index swaps show a 68% chance of a rate hike this month, with the odds increasing to 86% by March.
Ueda’s remarks echo Deputy Governor Ryozo Himino’s comments on Tuesday, which did not rule out the possibility of rate hike next week. The board will decide whether to raise borrowing costs based on the outlook to be compiled at the meeting, Himino said.
At the upcoming meeting, the bank will also release its updated economic outlook report, where officials are likely to discuss raising their inflation outlook, according to people familiar with the matter.
The officials will probably talk about upgrading projections for an underlying price gauge for this fiscal year and next, reflecting a recent surge in the cost of rice and the weakening of the yen, the people said.
–With assistance from Taiga Uranaka and Mia Glass.
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