By Leika Kihara
HIROSHIMA- Bank of Japan board member Toyoaki Nakamura said on Thursday the central bank must scrutinize various economic indicators, including those on wages and business sentiment, in its deliberations on whether to raise interest rates this month.
The remark by Nakamura, who is considered as dovish on monetary policy, likely keeps alive the chance of a rate hike at the BOJ’s next meeting on Dec. 18-19.
“I’m not opposed to rate hikes. But the decision should be data dependent, and made in accordance with improvements in the economy,” he told a news conference.
“There will be various data coming up (ahead of the December meeting),” such as monthly wage data and the BOJ’s quarterly tankan business sentiment survey, he said.
Following Nakamura’s remarks, Japanese government bond yields rose as some traders revived bets of a December rate hike, after having pared them back just a day ago on media reports the BOJ would be cautious about raising rates so soon.
Markets now see about a 38 percent chance of a rate increase in December The government’s wage survey for October is due on Friday and the BOJ’s tankan survey on Dec. 13.
In a speech delivered before the news conference, Nakamura said the BOJ must move cautiously in raising interest rates as consumption remains weak and small firms may struggle to keep increasing wages.
“I am personally not confident about the sustainability of wage growth,” Nakamura said in a speech to business leaders in the western Japan city of Hiroshima, adding that consumption lacked momentum as rising living costs hit households.
While big companies are raising pay aggressively to attract talent, some smaller firms are struggling to earn enough profits to keep doing so, he said. – Reuters
