Nagoya: The Bank of Japan (BOJ) Governor Kazuo Ueda announced that the central bank will evaluate the “pros and cons” of increasing interest rates in its upcoming policy meeting, indicating a possible rate hike this month.

According to Thai News Agency, the yen and government bond yields experienced a rise following Ueda’s announcement, with market analysts estimating an 80 percent likelihood of an interest rate increase during the December 18-19 meeting. In his address to business leaders in Nagoya, Ueda expressed optimism about Japan’s economic recovery from its third-quarter contraction, noting that the effects of US tariffs were less significant than initially anticipated. He suggested that the easing concerns regarding tariffs may lead the BOJ to meet its economic and price forecasts, paving the way for a potential interest rate hike.

The BOJ Governor further mentioned that the bank is actively gathering data on wage trends in preparation for the December policy meeting. The bank is also assessing domestic and international economic and price developments, as well as market movements, as part of its deliberations on the potential rate increase.

Following Ueda’s statements, the yen appreciated by 0.4 percent, reaching a day high of 155.49 yen per dollar. Additionally, the yield on two-year Japanese government bonds, which are highly sensitive to the Bank of Japan’s policy rate, increased by 2 basis points to 1.01 percent, marking its highest point since June 2008.