TOKYO (Reuters) -Bank of Japan Governor Kazuo Ueda said the central bank could “respond with monetary policy” if exchange-rate moves affect the country’s inflation and wages in ways that are hard to ignore, the Asahi newspaper reported on Friday.
When asked whether the BOJ could raise interest rates this year, Ueda said it was “dependent on data” and how much progress Japan makes toward sustainably and stably achieving the central bank’s 2% inflation target, according to Asahi’s interview that was conducted on Wednesday.
Ueda said the chance of stably and sustainably achieving the BOJ’s 2% target is expected to heighten significantly as rising wages gradually push up inflation, the paper said.
“We ended our massive stimulus programme because we saw prospects for trend inflation to approach 2% come into sight. If we become more confident about such prospects, that will be one reason to move interest rates,” Ueda was quoted as saying.
The BOJ ended eight years of negative interest rates and other remnants of its unorthodox policy last month, making a historic shift away from its focus on reflating growth with decades of massive monetary stimulus.
