Japan's BOJ Eyes Rate Hikes Amid Clearing Economic Clouds

The Bank of Japan is considering raising interest rates as risks to the U.S. economy ease. Governor Kazuo Ueda hinted at further rate hikes if Japan's economy shows a moderate recovery. Despite elections complicating policy, most economists foresee a rate hike by March.

The Bank of Japan (BOJ) maintained its ultra-low interest rates on Thursday, hinting at potential rate hikes as risks to the U.S. economy diminish. The central bank also expressed optimism that inflation would hover around the 2% target in the coming years as economic conditions improve.

Governor Kazuo Ueda noted the improvement in domestic wages and prices, signaling a possible direction for future monetary policy. Ueda emphasized that no fixed timeline exists for the next rate hike, stating decisions will be data-driven at each policy meeting.

The recent loss of a parliamentary majority by the ruling coalition presents potential obstacles to policy implementation, complicating the normalization of years-long ultra-easy policies. Nevertheless, most economists anticipate a rate hike by March next year.

(With inputs from agencies.)