Bank of Japan (BOJ) Governor Kazuo Ueda yesterday sent a fresh reminder to bankers that he is going to raise the benchmark rate if the economy continues to improve this year.
“Our stance is that we will raise the policy interest rate to adjust the degree of monetary easing if economic and price conditions keep improving,” Ueda said in his first public speech this year.
The governor spoke briefly at a new year conference held by the Japanese Bankers Association in Tokyo.
Photo: Bloomberg
Ueda’s reiteration of his existing stance comes as central bank watchers seek clues over whether the bank would raise rates this month or in March.
The governor kept his options open on the timing of the next rate hike by saying that it would depend on the economy, inflation and financial conditions.
The BOJ held its benchmark rate at 0.25 percent last month.
The summary of opinions for last month’s gathering hinted that some board members saw a need to increase borrowing costs sooner rather than later.
Ueda’s comments yesterday underscore that the central bank might be moving rates this month, while it could still choose to wait it out depending on circumstances. That uncertainty has kept the yen at a relatively weak level.
The yen held its losses after Ueda spoke, following its drop of as much as 0.4 percent to ￥157.83 against the US dollar yesterday morning.
Japan’s five-year government bond yield climbed to its highest level since 2009 and the 10-year yield rose to its peak since 2011 amid elevated US long-term yields and speculation that the BOJ would hike interest rates.
The BOJ ended its massive monetary stimulus program, including the world’s last negative interest rate, in March last year.
The central bank is set to hold its next policy meeting between Jan. 23 and 24. There is no scheduled public speech by Ueda before then, although BOJ Deputy Governor Ryozo Himino is set to give a speech and attend a news conference on Tuesday next week. That event is expected to draw close market attention for any further clues over a rate hike this month.
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