Kazuo Ueda: If the economy continues to improve this year, the Bank of Japan will raise interest rates.

Bank of Japan Governor Haruhiko Kuroda once again reminded bankers that if the Japanese economy continues to improve this year, he will raise the benchmark interest rate. Kuroda made a brief speech at the New Year meeting of the Japan Bankers Association in Tokyo. In his first public speech of 2025, Kuroda stated, "Our position is that if the economic and price situation continues to improve, we will raise the policy rate to adjust the degree of monetary easing." As Kuroda reiterated his current stance, observers of the Bank of Japan are looking for clues about whether the central bank will hike interest rates this month or in March. Kuroda emphasized that the timing of the next rate hike will depend on the economic, inflation, and financial conditions. After keeping the benchmark interest rate at 0.25% last month, Kuroda made dovish remarks at a press conference following the rate decision announcement. He stated then that more information on Japanese wages and Trump policies are needed before the Bank of Japan decides to raise rates. Furthermore, Kuroda showed little concern about the weakening yen at the press conference, nor did he indicate any urgency to tighten monetary policy, further dampening expectations of an imminent increase in key rates in Japan. Kuroda's dovish remarks led to speculation in the market that the Bank of Japan will not hike rates in January, causing the yen to fall to its lowest level against the dollar since July of last year. Kuroda's latest comments on Monday highlight that the Bank of Japan may adjust rates this month, but may still choose to wait depending on the situation. This uncertainty has kept the yen relatively weak. The Bank of Japan will hold a policy meeting on January 23-24. Before that, Kuroda does not have any plans for public speeches. However, Deputy Governor of the Bank of Japan, Ryozo Himino, is scheduled to give a speech and hold a press conference on January 14. This event will be closely watched by the market for further clues on whether there will be a rate hike in January.