Bank of Japan board member Junko Koeda signaled that there could be a rate hike as soon as next month by pointing to the need for normalization, after the yen hit its lowest level in roughly 10 months.

"Given that real interest rates are currently at significantly low levels, I believe that the bank needs to proceed with interest rate normalization,” Koeda said Thursday in a speech to local business leaders in Niigata Prefecture.

Koeda’s comments appeared to be trying to send a hawkish message as the yen weakened, but the Japanese currency instead dropped further against the dollar, suggesting that investors were perhaps looking for stronger comments.

BOJ watchers are broadly expecting a rate hike no later than January, but overnight swaps market figures are suggesting decreasing bets for a move next month.

In her first speech since joining the board in March, Koeda indicated there’s a chance of a rate hike when the bank delivers its next policy decision on Dec. 19. After two board members called for a rate hike at the BOJ’s October meeting, Koeda’s remarks are likely to strengthen market perceptions that the need for a rate move is shared more broadly within the nine-member board.

A former economics professor, Koeda referred to recent indicators showing that the output gap, a balance of supply and demand in the economy, has been at around 0% while the labor market has been tight amid a growing sense of labor shortage.

“In this situation, I believe it is necessary that the bank continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with improvement in economic activity and prices,” she said.

Earlier this week a government report showed Japan’s economy contracted 1.8% on an annualized basis in the three months through September. It was the first negative figure in six quarters, but was impacted by one-off factors including regulatory change in the construction sector, and economists were of the view that the underlying trend isn’t too weak.

At the same time a key inflation measure has stayed at or above the central bank’s target for three and a half years, with a recent weakening of the yen threatening to exert further inflationary pressures.

“My view is that Japan’s recent economic indicators have been solid overall,” Koeda said. She also said that price growth is relatively strong and underlying inflation, a gauge Gov. Kazuo Ueda has frequently cited as particularly important for deciding when to next hike rates, is about 2%. That suggests that, in her view, the BOJ has more or less met its target.