Bank of Japan President Ueda expects further progress in achieving the target rate next year by Reuters

Written by Laika Kihara

TOKYO (Reuters) – The central bank expects the economy to come close to meeting its 2% inflation target sustainably next year, Bank of Japan Governor Kazuo Ueda said on Wednesday, suggesting the timing of the next interest rate hike is approaching.

The economy has shown signs of improvement as worsening labor shortages have pushed wages higher, Ueda said, emphasizing Japan’s progress in meeting the rate target permanently set by the Bank of Japan after years of strong monetary stimulus.

But he warned of the need to scrutinize the repercussions of the “high uncertainty” surrounding foreign economies, especially the economic policies of the next US administration of President-elect Donald Trump.

“The timing and pace of adjusting the degree of monetary easing will depend on developments in economic activity and prices as well as future financial conditions,” Ueda said in a speech to business lobby group Keidanren.