Bank of Japan board member Junko Nakagawa said Monday the Bank will continue raising the policy interest rate and adjusting the degree of monetary accommodation in line with improvements in economic and price developments.
Nakagawa, however, gave no indication of when the next rate hike might occur. “Considering that high uncertainties remain regarding the impact of trade and other policies in each jurisdiction, the Bank will make monetary policy decisions as appropriate by continuing to carefully assess data and information that becomes available,” Nakagawa, regarded as a neutral board member, told business leaders in Okayama City.
She highlighted three key risks the Bank is monitoring — the outlook for the U.S. economy, the impact of trade and other policies globally, and the wage- and price-setting behaviour of Japanese firms and its effects on domestic economic activity and inflation.
On the price outlook, Nakagawa said the year-on-year increase in the CPI is expected to moderate as the boost from higher rice and other food prices fades.
“The Bank deems that the price rises seen thus far can also be attributed to a shift in firms’ behaviour toward raising wages and prices. Careful attention is therefore warranted to how such behaviour will develop going forward,” she said.
