by Leika Kihara
TOKYO (Reuters) – The Bank of Japan (BoJ) will raise interest rates again if price dynamics move closer to its 2% target as expected, the institution’s governor, Kazuo Ueda, said.
“If our inflation expectations change, this justifies modifying our monetary policy. But we do not yet have firm ideas on the pace and timing” when the rate increases will take place, the governor declared in Parliament on Tuesday Japanese.
Kazuo Ueda said the BOJ needed to keep rates at ultra-accommodative levels for now as domestic demand-driven inflation remained “somewhere below 2%.”
“If demand-driven inflation accelerates its return to our target, which we expect, we will adjust the size of the monetary stimulus by raising rates,” the governor said.
The BoJ will meet on Thursday and Friday and is expected to decide to keep rates at current levels, while announcing new inflation and growth forecasts.
The BOJ will likely announce that it expects inflation to remain close to its 2% target for the next three years, sources told Reuters, which would suggest the central bank would raise rates a second time This year.
(Report by Leika Kihara, by Corentin Chappron, edited by Blandine Hénault)
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