MNI BRIEF: BOJ's Koeda Sees Underlying CPI At 2%

Bank of Japan board member Junko Koeda said Thursday that the BOJ will continue raising its policy interest rate to adjust the degree of monetary easing in line with improvements in the economy and prices, though she gave no indication of the timing of the next move.

“While there are many measures of underlying inflation, taking into account their measurement errors and estimation uncertainty, overall, I believe that underlying inflation is about 2%,” Koeda, who joined the board in March, told business leaders in Niigata City.

Koeda said it is important to assess whether underlying inflation has remained stable or become anchored in order to achieve the BOJ’s price stability target.

“Prices in Japan have recently been rising faster than the rate of underlying inflation,” she said, adding it will be necessary to monitor whether the impact of temporary supply-side factors on CPI will fade as expected.

Koeda added that the BOJ must also watch “whether the rise in the price of food and other items could persist for longer than expected and to what extent such developments may influence inflation expectations.”