BOJ keeps up rate-hike signal as wages rise

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By LEIKA KIHARA

TOKYO- The Bank of Japan will continue to raise interest rates if underlying inflation accelerates toward its 2 percent target as projected, a senior central bank official said on Wednesday.

“Underlying inflation is heading toward 2 percent but still remains below that level now. As such, we must support economic activity with loose monetary policy,” Kazuhiro Masaki, director-general of the BOJ’s monetary affairs department, told parliament.

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“Having said that, we will continue to raise interest rates and adjust the degree of monetary support, if underlying inflation accelerates toward 2 percent as we project,” he said.

The remarks suggest the BOJ is maintaining its resolve to steadily push up borrowing costs despite rising uncertainty from US President Donald Trump’s tariff policies, which is heightening market volatility.

Japan’s core consumer inflation hit 3.0 percent in December, marking the fastest year-on-year pace in 16 months and exceeding the BOJ’s 2 percent target for nearly three years.

But the central bank has said it focuses on underlying inflation, or the broad trend of price moves driven by domestic demand that is measured by various indicators, in judging whether inflation will sustainably hit its 2 percent target. – Reuters

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