The Governor of the Bank of Japan made vague remarks, leaving the question of whether or not to raise interest rates in December still uncertain.

Bank of Japan Governor Haruhiko Kuroda said that the Japanese economy is moving towards sustained inflation driven by wages and warned against keeping borrowing costs too low; this leaves the possibility of another rate hike as early as next month. The markets closely watched Kuroda's speech on Monday, his first statement on monetary policy since Donald Trump won the US presidential election on November 5. He also mentioned that the Bank of Japan does not necessarily have to wait for the uncertainty surrounding Trump's economic policies and other external risks to completely dissipate before raising rates again. Kuroda pointed out that the Bank of Japan must timely reduce stimulus measures, as keeping real interest rates low for too long may accelerate inflation at an unexpected speed, indicating that the Bank of Japan may raise rates again soon. Kuroda stated at a press conference on Monday, "There are many uncertain factors that we need to carefully examine. But this does not mean we have to wait for everything to become clear. We will decide on our policy at each meeting based on available data and information. We see progress on the domestic front. The timing of adjusting our monetary support will depend on economic, price, and financial prospects." He noted that there are increasing signs that wages will continue to rise, prompting businesses to raise not only prices of goods but also service prices. However, he did not give any clues about whether the Bank of Japan will hike rates in December, which disappointed traders. Traders had been betting that Kuroda might provide clearer hints of a policy shift next month. This also led the market to expect a 54% likelihood of a 25-basis-point rate hike by the Bank of Japan at its next meeting on December 18-19, almost unchanged from before Kuroda's speech. Due to the lack of clear guidance on the timing of the next rate hike, the US dollar rose 0.35% against the Japanese yen on Monday to 154.72, moving away from the low of 153.86 reached on Friday. A survey conducted in early October by institutions showed that most economists do not expect the Bank of Japan to hike rates again this year, but nearly 90% of them expect the Bank of Japan to hike rates in March next year. The Bank of Japan ended negative interest rates in March and raised the short-term policy rate to 0.25% in July, as officials believed Japan was on track to achieve a sustainable 2% inflation target. Kuroda pointed out that one of the factors that prompted the rate hike in July was the ongoing rise in inflation pressures caused by the weak yen, which would increase import costs. This made many market participants bet that the yen's movement would be crucial in determining the timing of the next rate hike by the Bank of Japan. Kuroda commented on the recent drop in the yen, saying, "The weak yen has indeed raised costs and had a significant negative impact on consumers. But it is positive for exports and inbound tourism. The overall impact on the Japanese economy is difficult to assess." When asked about the impact of Trump returning to the White House, Kuroda pointed out that it will take a long time for Trump's economic policies to become clear. Toru Suehiro, chief economist at Daiwa Securities, said, "If people assume that the Bank of Japan will prepare for a rate hike, the probability of a hike in December will decrease. But you could also say that the Bank of Japan is leaving room for maneuver, as Kuroda's comments lean towards further rate hikes." Kuroda stated that rising wages and strong profits have driven up consumption and capital expenditures, indicating confidence that domestic conditions for a rate hike in the near term are mature; Japanese businesses not only raised prices of goods in October but also raised service prices, suggesting that inflation is more driven by domestic demand and wage increases rather than rising raw material costs. Kuroda expects that wage-driven inflation pressure will intensify as the economy continues to improve and businesses continue to raise wages, and he mentioned that the focus of the Bank of Japan's monetary policy would be on whether wage and price growth will continue to accelerate. He said another consideration is whether global economic growth will continue to expand and support Japan's export-dependent economy. Kuroda pointed out that the possibility of a soft landing for the US economy seems to be increasing, as concerns about the outlook for the US economy diminish and market sentiment improves. However, he added that the central bank must remain vigilant against external risks and geopolitical risks that could cause market volatility.