The Bank of Japan raised its regional economic assessment for the first time since early last year, signaling stronger confidence in the recovery and providing support for another rate hike. According to Sina Finance, the central bank upgraded its view of the Tohoku and Shikoku regions in its quarterly report covering nine regions.

The Bank of Japan said all nine regions described local economies as moderately recovering, recovering, or moderately picking up, although some areas still showed signs of weakness. The report did not signal an urgent need for an immediate rate hike, but the upgraded assessment suggests the economy is moving in line with the bank's view that further tightening is needed.

The Bank of Japan said many companies have implemented sizable wage increases to attract and retain workers amid high profits and persistent labor shortages. Nominal wages rose 3.8% in August, marking the seventh straight month of gains above 3% and the longest such streak since 1992.

Overnight index swap pricing showed investors saw about a 90% chance of a rate hike before December, while the odds of a hike at the next policy meeting on October 30 were about 11%.