(Bloomberg) -- Bank of Japan Governor Kazuo Ueda says handling monetary policy will get tougher from the year-end and through next year, remarks that are likely to further fuel market speculation of a looming shift in direction.
“It will become even more challenging from the year-end and heading into next year,” Ueda said, referring to policy management, in response to a question in parliament Thursday. “We will work to properly communicate and conduct appropriate policy.”
The comments are likely to keep investors on guard against an early BOJ step toward a rate hike. Ueda’s remarks come a day after his deputy, Ryozo Himino, hinted that such a move may be getting closer and played down fears over the potential negative impact of a rate hike.
Read More: BOJ Deputy Chief Hints That Negative Rate End May Be Closer
Himino’s remarks prompted investors to move up their prediction for a BOJ exit from negative rates to January from April previously, according to Shoki Omori, chief desk strategist at Mizuho Securities.
Ueda and his fellow board members are closely scrutinizing economic developments to see if they can finally scrap the world’s last negative interest rate.
The governor didn’t give any indication of new evidence showing progress toward hitting the bank’s price target. Instead, he stuck largely to his previous comments about not seeing enough certainty yet and pointed to the need for wage increases.
“We may not be at a stage to talk about an exit now, but to ensure it will go smoothly when it happens we will make efforts to convey information shortly beforehand,” Ueda said.
Some market players are already wondering what a new policy regime will look like after the bank gets rid of the negative rate of -0.1%. Ueda kept his hands free by avoiding any clear hints.
Possible policy rates in the post-sub zero world would include the unsecured overnight call rate and the rate for excessive reserves in commercial banks’ current accounts at the BOJ, the governor said.
Ueda added that the central bank hasn’t decided on a pace of rate hikes going forward or whether a rate increase is warranted.
“I don’t have anything in mind at all for what it should be,” Ueda said, referring to the future policy rate.
The BOJ’s policy board concludes its next meeting on Dec. 19.
--With assistance from Yoshiaki Nohara.
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