by By Leika Kihara
Fukushima (Reuters) -the Bank of Japan may have to increase the interest rates “decisively” to tackle the inflation risks even as uncertainties about American rates, a harveless member of her board said that the bank’s attention emphasizes to grow price pressure.
Board member Naoki Tamura said that underlying inflation was on his way to achieve the goal of 2% of the BoJ and to rise at a slightly faster pace than expected to announce US President Donald Trump of major mutual rates.
Although the American rates will weigh the Japanese economy and prices for the time being, consumer inflation will probably move around 2% handle due to tax 2027, he said Wednesday.
“It is unlikely that the underlying consumer inflation, which has increased, will become down”, because companies are expected to adhere to their practice of increasing wages and prices, he said.
“There is a good possibility that our target stability will be achieved earlier than expected,” Tamura said in a speech for managers in Fukushima.
“When the chance of achieving our price stability goal increases, or when the upward risks for prices grow, we can experience a situation in which we have to act decisively, despite increased uncertainties,” he said.
De Boj ended last year for a decade, massive stimulation program and in January increased the short -term interest rate to 0.5% in the position that Japan was about to reach his 2% inflation objective.
Although the Central Bank has indicated the willingness to further increase the rates, the economic impact of higher American rates forced the Public Prosecution Service to reduce its growth logs and complicated decisions regarding the timing of the next rate increase.
Tamura said that the Japanese medium to long term the inflation expectations have gradually increased as price increases are widespread.
“I personally believe that the focus should be on inflation expectations of companies and households, which are the actual motives of economic activity. I assume these expectations have already achieved around 2%,” he said. “The attention must be paid to the question of whether further increase is more than expected.”
(Reporting by Leika Kihara; Edit by Christopher Cushing & Shri Navaratnam)
