The BOJ Hunts for Keys to the Interest-Rate Time Machine

Surprises are fine in central banking provided they don't land too frequently — and are of the right kind, preferably dovish. The tricky part about the Bank of Japan is that the bombshells come often and have not been of the favorable variety. The first interpretation, usually negative, wins. Japan itself has trained markets to behave this way.

The latest revelation came on the weekend, when Governor Kazuo Ueda appeared to hint at a timetable for ending negative interest rates. Given Japan is the last advanced economy to still have a benchmark rate below zero, any guidance on timing, however qualified, is significant. Ueda told the Yomiuri newspaper that he may have enough information by year-end to judge whether wages will continue their healthy and long-desired ascent. Sustained increases in pay have been held out by the BOJ as one of the remaining key tests for unwinding über-easy money.