Investing.com-- The Japanese yen strengthened on Wednesday after the Bank of Japan (BOJ) Governor Kazuo Ueda indicated that the central bank may consider raising interest rates if economic and price conditions continue to improve.
Ueda stated that the timing of interest rate hikes will largely depend on the economic policies of the new U.S. administration and the progress of this year’s wage negotiations in Japan.
The yen's USD/JPY pair fell 0.4% on Wednesday, meaning the yen strengthened 0.4% against the U.S. dollar.
A day earlier, BOJ Deputy Governor Ryozo Himino said the central bank might consider raising rates in the upcoming policy meeting, citing sustained wage growth.
Recent economic indicators show that Japan's economy is experiencing modest growth. In the third quarter, the economy expanded at an annualized rate of 1.2%, driven by increased consumer spending and a stable labor market.
In March last year, BOJ ended its negative interest rate policy, and by July, it had increased the short-term policy rate to 0.25%.
It is now considering further rate hikes as inflation has consistently stayed above the central bank's 2% target.
The BOJ's next policy meeting is scheduled for January 23-24.