By Leika Kihara

TOKYO () – Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank expects the economy to move closer to sustainably achieving its 2% inflation target next year, suggesting the timing of its next interest rate hike was nearing.

has shown signs of improvement as intensifying labour shortages push up wages, Ueda said, stressing progress Japan has made in durably achieving the BOJ’s price target after years of aggressive monetary stimulus.

But he warned of the need to scrutinise the fallout from “high uncertainties” surrounding overseas economies, especially the economic policies of the incoming U.S. administration of President-elect Donald Trump.

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