Bank of Japan (BOJ)

“The board will have discussion to decide whether to raise the policy rate or not, based on the outlook to be compiled” at the monetary policy meeting between Jan 23-24, says Ryozo Himino.

Inflation in Tokyo accelerated for a second month in December, as the government temporarily phased out utility subsidies, which will likely support expectations of an interest rate hike next year.

The yen weakened against the dollar following Bank of Japan Governor Kazuo Ueda’s comments.

Rate hike bets had receded in recent weeks, contributing to a six-day losing streak in the yen through Monday, its longest stretch of declines versus the dollar since June.

They are betting the Japanese currency will advance further amid rising market speculation that the Bank of Japan will raise rates by a quarter point this month.

The last time the BOJ conducted three hikes in a single year was in 1989. The third increase that year came on Christmas Day just four days before the Nikkei 225 stock average peaked at 38,957.44.

With his latest remarks, Ueda leaves open the possibility of a December rate move without boxing himself in to that position.

Wage trends are among the most closely watched indicators as the government and Bank of Japan seek to achieve a positive cycle of rising salaries fuelling spending, spurring demand-led inflation.

“He doesn’t seem to have much knowledge of the economy, and he may be easily influenced by the opinions of those around him,” says one fund manager.

The Japanese yen strengthened as much as 1.3% to JPY142.96 following the announcement of Shigeru Ishiba as Japan's next prime minister.