Kazuo Ueda: Will decide on interest rate hike next week. Positive progress in wage negotiations.

Bank of Japan Governor Haruhiko Kuroda hinted that a decision on whether to raise interest rates will be made at the next policy meeting next week. His comments have strengthened the yen and intensified speculation about the upcoming policy measures by the central bank. Kuroda also mentioned on Wednesday that he has heard encouraging opinions about wages at various industry New Year events and at a recent regional branch managers' meeting of the Bank of Japan. He added in a speech at an event hosted by the Japan Bankers Association that the momentum of the US economy and spring wage negotiations are still crucial. Following Kuroda's remarks, the yen rose to 157.20 against the US dollar, after hovering around 158 previously. Kuroda's latest comments come as observers of the Bank of Japan are looking for clues about the possibility of a rate hike before the policy meeting on January 23-24. Overnight index swaps show a 68% chance of a rate hike this month, increasing to 86% by March. Kuroda's comments on Wednesday provided a more specific insight into the possible topics of discussion at the meeting compared to earlier views this month. Kuroda's remarks echo those of Deputy Governor Masayoshi Amamiya on Tuesday, who also did not rule out the possibility of a rate hike next week. Amamiya stated that the Board will decide whether to raise borrowing costs based on the compiled outlook at the meeting. Forex strategist Takeshi Ishida of Kansai Mirai Bank stated, "Kuroda's comments are broadly similar to Amamiya's comments, but given that he is the governor, the weight of his words is different. The market interprets this as an increasing likelihood of a rate hike in January." According to sources familiar with the matter, the Bank may also release its latest economic outlook report at the upcoming meeting, with officials likely to discuss raising inflation outlook. Officials may discuss revising forecasts for baseline price indicators for this fiscal year and the next fiscal year to reflect the recent spike in rice costs and the weakening of the yen. Following a regional economic report released after a branch managers' meeting earlier this month, the Bank of Japan indicated some progress in wage growth. The report noted that companies are increasingly realizing the necessity of sustained wage growth. Wage negotiations have started relatively positively, with reports indicating that some companies, including retail giant AEON STORES and Nippon Life Insurance, plan to raise wages for certain employees by at least 6%. After the policy meeting in December, Kuroda expressed his hope for more information on wage trends.