(Bloomberg) -- Bank of Japan Board Member Seiji Adachi indicated his preference to wait at least until April to confirm a wage-inflation cycle is in place, in what appeared to be an attempt to cool market speculation over an early policy normalization move.

“There seems to be emerging views that the bank is laying the groundwork for an exit, after October’s move to add flexibility to the BOJ’s yield curve control,” Adachi said in a speech to local business leaders Wednesday in Ehime, western Japan. 

“But we need to continue with easing patiently, and we’re not at a phase to discuss an exit strategy, given the current economy and inflation,” he said.

Adachi’s remarks suggest the low likelihood of the bank ending the world’s last negative interest rate policy when its board meets next month, in line with recent comments from Governor Kazuo Ueda. While a key price measure has stayed above the BOJ’s 2% goal for 19 months, Adachi said it’s still necessary to confirm a virtuous cycle between wages and inflation before making policy moves. 

Speaking to reporters later in the day, Adachi said the bank will only be able to confirm next year’s wage trend after the new fiscal year starts in April. Meanwhile some private economists see subzero rates being scrapped by the end of January.  

Still, BOJ watchers are unlikely to let their guard down over even the December meeting, following Adachi’s comments. About a month before Ueda surprised market players by unexpectedly loosening the BOJ’s grip on yields in July, Adachi said it was too early to make a policy adjustment.  

Inflation in Japan has stayed elevated, with a key measure slightly accelerating in October. A BOJ gauge measuring the underlying inflation trend — the weighted median — also sped up to a record pace of 2.2% last month in data going back to 2001, according to a central bank report Tuesday.  

“Given what’s been happening in inflation so far, I think upside risks are larger,” Adachi said. 

While Adachi’s comments overall seemed to suggest he doesn’t see a need to normalize policy any time soon, his concerns over high inflation are likely to help keep alive expectations that the BOJ will shift from its ultra loose policy by the middle of next year. 

In a Bloomberg survey last month, 70% of economists forecast a step toward tightening by April. 

There are extremely high uncertainties over the BOJ’s base case that sees core inflation cooling to 1.7% in fiscal 2025, Adachi said. Given the need for monetary easing, the bank’s October decision to set the upper limit of 10-year yields at 1% as a reference point was positive, and having yields well above that level could harm the economy, he said.  

--With assistance from Sumio Ito.

(Updates with additional comments from Adachi)

©2023 Bloomberg L.P.