Ueda Kazuo refuses to disclose clues about interest rate hikes, while the Japanese yen exchange rate continues to weaken.

On Monday, Bank of Japan Governor Haruhiko Kuroda avoided any sensitive wording about a possible rate hike in December or in the future during an important speech that was closely watched by global investors. He emphasized that he would not reveal any clues related to the timing of a rate hike, based on economic data. Kuroda's more dovish remarks this time marked a departure from the hawkish comments he had been making in public earlier this year, pushing the yen exchange rate lower after his speech, with the USD/JPY rate crossing the 155 level once again. In his final important speech before the Bank of Japan's monetary policy meeting on December 18-19, Kuroda stated that the timing of the Bank of Japan's next policy adjustment would depend on economic activity and prices. He reiterated the Bank's reliance on economic data and maintained an open stance on the specific timing of the next rate hike. In a speech to local business leaders in Nagoya, central Japan on Monday, Kuroda stated, "The actual timing of policy adjustments will continue to depend on the developments in economic activity and prices, as well as future financial conditions." After Kuroda's speech, the yen exchange rate continued to weaken, with the USD/JPY rising 0.5% to 155.14 yen per dollar. The benchmark 10-year Japanese government bond yield also slightly declined, as Kuroda's latest comments were seen as more moderate than some market participants had expected. Overnight index swaps were still pricing in the possibility of a rate hike next month, with the likelihood of a rate hike in December by the Bank of Japan estimated at around 54%. Following the unexpected rate hike by the Bank of Japan in July, which caused significant volatility in global financial markets, the Bank's leadership generally acknowledged the need to strengthen communication with the markets and manage expectations. This led to speculation that Kuroda would provide a clearer indication of the Bank of Japan's intentions before its next actions. "Before Kuroda's speech, there were speculations that he would make hawkish remarks, given that the yen had depreciated above the 150 yen level against the dollar, increasing the likelihood of Japanese government intervention in the exchange rate," said Junhtarou Morimoto, senior forex analyst at Sony Financial Group Inc. "If he did not provide any hawkish hints about a possible rate hike at the December meeting, the yen could be further sold off in the market." Kuroda emphasized that the Bank of Japan is moving towards a rate hike and sticking to its standard position on the issue. He reiterated his stance that if the Bank of Japan sees improvements in global economic activity, as well as domestic economic, wage growth, and inflation prospects, the Bank will continue to raise policy rates. Tadashi Anda, chief economist at UBS Securities and former Bank of Japan official, said, "Kuroda was more cautious than expected. The Bank of Japan may believe it is too early to make any significant decisions before the next meeting in a month. However, this does not mean that a rate hike in December is off the table. Officials led by Kuroda are monitoring various risks and looking for the right opportunity." Kuroda stated that the Bank of Japan will need to closely monitor various risks and potential impacts, including the U.S. economy, and suggested that given recent positive data, the U.S. economy is more likely to achieve a "soft landing." After last month's monetary policy meeting, Kuroda stressed that with the diminishing risks in the U.S. economy, there was no longer a need to consider timing when making any monetary policy adjustments before the Bank of Japan's next action. Regarding Donald Trump's recent election victory, Kuroda did not reveal specific details and stated that it would take some time for the overall situation of the Trump administration's policies and impacts to become clearer. Currently, his tone, which appears less hawkish and not overly dovish, signifies that Kuroda is refusing to commit to a specific date for the next rate hike or provide any clues, showing a more cautious approach by Bank of Japan officials since the August global financial market turmoil following the unexpected rate hike in July. "With Japan's economic activity, wage, and price improvements continuing, gradual adjustments in monetary policy will support long-term economic growth," he said. This will "help achieve Japan's price stability target in a sustainable and stable manner."