BoJs Himino: Central bank likely to keep hiking rates based on economic, price, financial trends

Central bank likely to keep hiking rates based on economic, price, financial trends.

Central bank to weigh pace and timing of rate increases, focusing on baseline scenario probability and risks.

Core inflation nearing 2% threshold.

Recent price increases not only from temporary supply shock, risk of core inflation straying from target.

Rising oil prices drag on growth, but Japan’s economy remains robust on strong corporate profits and household income.

Currency fluctuations among key factors influencing Japan’s economy, prices.

Monetary policy not aimed at currency moves, but FX fluctuations now affect inflation more due to shifts in corporate behavior.

Currency moves may impact inflation expectations, core inflation, so we will keep monitoring developments closely.

BoJ’s decision to pause bond taper takes into account its view it will take time for banks, individuals to increase bond buying, not aimed at heeding fiscal policy.

Delay in dealing with price risks could lead to risk of inflation overshoot materialising, hurt economy long term.

Wages are rising including for smaller firms with some seeing this year’s wage hike pace exceeding that of last year.

Prices for wide range of goods, services rising moderately.

Consumption is resilient, which gives demand boost to prices.

Mechanism by which wages and prices rise in tandem becoming embedded in economy.

In setting our bond buying plan, what’s most important is to allow markets to freely set prices.

We actively exchange views with overseas authorities but in the end we make our own decision on policy.

Won’t comment on market pricing of future rate hikes.

Impact of rising fuel costs on CPI will likely become bigger around summer this year.

Even if price rises are driven by supply shock, if that leads to broad-based price rises and affect underlying inflation, we need to consider taking policy action.

There are also demand-driven factors to recent price rises as robust corporate profits, steady wage gains, brisk ai-related demand underpinning Japan’s economy.