MNI POLICY: Ueda Dec 1 Speech Crucial For BOJ Hike Timing

Bank of Japan Governor Kazuo Ueda’s speech to business leaders in Nagoya City on Dec 1 will be crucial for determining the probability of a rate hike at the Dec 18-19 policy-setting meeting, with a bullish economic and price assessment indicating that Bank executives see a chance of reducing the degree of easy policy at the year’s final meeting, MNI understands.

However, if Ueda largely endorses the economic and price assessment in the Outlook Report released last Thursday when the BOJ held its short-term policy rate steady at 0.5%, it will mean that the Bank can wait until January after major firms’ wage hike attitudes will be available at the beginning of the next year.  Last week the BOJ left its core consumer price index forecasts for this fiscal year and fiscal 2026 and 2027 unchanged at 2.7%, 1.8% and 2.0%, and maintained the assessment that “risks to prices are generally balanced.” (See MNI BOJ WATCH: Ueda Hints Bank Close To Hike; Wages Key)

Whatever Ueda says in Nagoya, December’s final decision will depend on data and other information including the December Tankan survey on Dec 15. The BOJ will hold its quarterly branch managers’ meeting in mid-January and by then will have more data on the impact on Japanese companies of U.S. trade policies.