BOJ to keep raising interest rates if economy on track, Governor Ueda says

Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank will continue to raise interest rates if economic and price developments move in line with its projections.

Ueda said Japan's recent "very high" inflation was driven mostly by temporary factors such as rising import costs and food prices, which are likely to dissipate.

A tightening job market and improvements in the economy will likely continue to push up wages and broader prices, he added.


"We expect underlying inflation to gradually converge toward 2% even when temporary rises in food prices disappear," Ueda told parliament.

"Underlying inflation, which defines sustained, medium- and long-term price moves, remains somewhat below our 2% target," Ueda said.

The BOJ raised its short-term policy rate to 0.5% in January on the view Japan was on the cusp of sustainably achieving its 2% inflation target backed by solid wage gains.

Ueda has said the central bank will keep raising interest rates if prospects of higher wages lead to broader price hikes, not just for goods but also for services.