BOJ may offer hints of next rate-hike timing in Ueda’s closely watched speech

TOKYO :Bank of Japan Governor Kazuo Ueda will deliver a speech and hold a news conference in the central Japan city of Nagoya on Monday, the BOJ said, an event that will be closely watched by markets for hints on whether it might raise interest rates next month.
It will be Ueda’s first opportunity to speak directly on monetary policy since Donald Trump’s victory in the U.S. presidential election on Nov. 5, and follows Japan’s third-quarter gross domestic product (GDP) data which showed surprising resilience in consumption.
Ueda’s comments will be scrutinised by markets for clues on how soon the BOJ could raise interest rates again, with analysts divided on whether it may come in December or January next year.
Having faced criticism for amplifying an August market rout with its surprise interest rate hike in July, Ueda may drop hawkish hints if the BOJ wants to prepare markets for the chance of a rate increase at the Dec. 18-19 meeting, some analysts say.
The yen’s recent renewed fall adds pressure on the BOJ to hike rates soon, as the currency’s weakness pushes up inflation and hurts households by boosting import costs, they say.
After a brief rebound to around 141 to the dollar in September, the yen has slipped back to levels before the BOJ’s July rate hike. It is now hovering around 156 yen, approaching the 160 line seen as a level that heightens policymakers’ alarm.
“As long as wages and services prices keep growing by around the current pace, the BOJ may find it sufficient to adjust the degree of monetary support,” said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities.
“There’s also renewed inflationary risk from the weak yen,” which heightens the chance of a December rate hike, she said.
Wholesale inflation accelerated in October at the fastest annual pace in more than a year, as renewed yen falls pushed up import costs for some goods, data showed on Wednesday.
Japan’s short-term government bond yields rose to their highest in more than a decade on Thursday as investors braced for the chance of a near-term BOJ rate hike.
At Nagoya, Ueda will deliver a speech and take questions from business executives from 10:00 to 11:30 a.m.(0100-0230 GMT), followed by a press conference from 1:45 p.m. to 2:15 p.m. (0445-0515 GMT), the BOJ said on Friday.
BOJ governors historically visit Osaka and Nagoya each year to exchange views with business executives and explain the reasoning behind the central bank’s monetary policy decisions.
The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25 per cent in July on the view Japan was on the cusp of durably achieving its 2 per cent inflation target.
A Reuters poll conducted on Oct. 3-11 showed a very slim majority of economists projecting the BOJ to forgo raising rates again this year, although nearly 90 per cent expect rates to rise by end-March.