Yen jumps more than 1% against dollar on policy talk

Governor Kazuo Ueda said handling monetary policy “will become even more challenging from the year-end and heading into next year”, Bloomberg News reported.

The unit strengthened to 145.54 per dollar in the afternoon, from about 147.35 late Wednesday.

Most other major central banks have pressed ahead with a campaign of interest rate hikes in a bid to tame prices.

But the BoJ has refused to shift from its long-term programme of sub-zero borrowing costs in order to kickstart the world’s number three economy.

Japanese policymakers have for several months hinted that they are willing to adopt a more normalised policy, such as minor tweaks to its yield curve control scheme, which sees the bank control the band within which government bonds are allowed to move.

Analysts have said the BoJ’s outlier policy is harming the economy by skewing the bond market and weakening the yen, in turn making imports more expensive.

Higher interest rates outside Japan have also prompted investors to invest money elsewhere and any tightening in BoJ policy could see money flowing back, hitting assets elsewhere such as U.S. Treasuries and stocks.

Ueda gave no indication of new evidence showing progress toward hitting the bank’s price target, sticking largely to his previous comments about not seeing enough certainty yet and pointed to the need for wage increases, Bloomberg reported.

“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.

Ueda’s remarks come a day after his deputy, Ryozo Himino, hinted that a tightening of policy may be getting closer and played down fears over the potential negative impact of a rate hike.

The BoJ’s next policy board makes its next decision on Dec. 19.