By Leika Kihara
TOKYO (Reuters) -Bank of Japan Governor Kazuo Ueda said on Tuesday the central bank will raise interest rates again if trend inflation accelerates toward its 2% target, in line with its forecast.
“If our price forecasts change, that would also be a reason to change monetary policy. But we don’t have any preset idea on the specific timing and pace” of rate hikes, Ueda told parliament.
He also said the BOJ must maintain ultra-loose monetary policy for the time being as trend inflation, or price rises driven by domestic demand and measured by scrutinising various indicators, remains “somewhat below 2%”.
Ueda’s remarks comes ahead of the BOJ’s two-day policy meeting that ends on Friday, when the board is set to keep interest rates unchanged and announce fresh quarterly growth and inflation forecasts.
The BOJ is likely to project inflation will stay around its 2% target for the next three years, sources have told Reuters, which would cement expectations the central bank will raise interest rates again this year from current near-zero levels.
