Bank of Japan Governor Kazuo Ueda has released a clear signal that interest rates may rise in December

Kazuo Ueda, governor of the Bank of Japan, gave the clearest hint yet that his policy committee could raise base rates this month, stressing that any rate rise would merely be an adjustment in the degree of easing and that the authorities would make appropriate decisions on whether to proceed with policy changes.
In a speech to local business leaders in Nagoya, central Japan, on Monday, Mr. Ueda said the central bank would "weigh the pros and cons of policy rate increases and make timely decisions by examining domestic and foreign economic, inflation and financial marekt conditions".
According to overnight index swap data, traders expect a roughly 64 per cent chance that the central bank will raise interest rates by the end of its next policy meeting on December 19, rising to a 90 per cent chance of action by January.
Ueda's statement follows a series of signals from policy committee members in support of interest rate hikes - in addition to two dissenting members calling for interest rate hikes at the last two meetings, Junko Koeda has made it clear that interest rate normalization should be advanced (without specifying a time), and Kazuyuki Masu has said in an interview with the Japan Economic News that the time for interest rate hikes is approaching. Even dovish member Asahi Noguchi pointed out last week that the risk of policy adjustments being too late is rising.
The yen strengthened slightly against the dollar after Mr. Ueda's speech, which came after the yield on two-year Japanese government bonds rose to its highest level since 2008 as expectations of a rate rise by the Bank of Japan mounted.