With the prospect of continued salary growth increasing and President elect Trump's inauguration speech making the outlook for US policies clearer, Bank of Japan Deputy Governor Ryozo Bingeno stated that the Bank of Japan will discuss whether to raise interest rates next week.

On Tuesday (January 14th), he stated in Yokohama that it would be "abnormal" for real interest rates to remain negative once Japan overcomes the shocks and factors that led to deflation.

He stated that various investigations and reports from regional branches of the central bank have strengthened people's hope that wage growth will remain strong this year.

Ryozo Kaneno also stated that the US economy may temporarily remain strong, and the "general direction" of US economic policy may become clear in Trump's inauguration speech on January 20th.

He said, "The council will discuss whether to raise interest rates next week and make a decision based on the economic and price forecasts in our quarterly outlook report

The two-day policy meeting of the Bank of Japan will end on January 24th, and some analysts predict that the bank will raise the current short-term interest rate of 0.25% at that time. The council will also release new quarterly growth and price forecasts as the basis for formulating monetary policy.

After Bank of Japan Governor Kazuo Ueda cited the uncertainty of domestic wage prospects and Trump's policies as reasons for delaying interest rate hikes last month, Vice Governor Ryozo Shimino's views on wage and US policy prospects have been closely monitored by the market.

In a quarterly report analyzing the regional economy released last week, the Bank of Japan stated that wage increases are spreading to businesses of all sizes and industries, indicating that the conditions for recent interest rate hikes are still in place.

According to sources, the prospect of continued wage increases and the weak yen leading to rising import costs have made the Bank of Japan more concerned about the increase in inflationary pressures, which may result in an upward adjustment of price forecasts this month.

The Bank of Japan believes that Japan is expected to achieve its long-term inflation target of 2%, so it ended negative interest rates in March and raised its short-term interest rate target to 0.25% in July.

Ueda has hinted that if wage increases expand to support consumption and allow companies to raise not only commodity prices but also service prices, they are prepared to further raise interest rates.