By Leika Kihara
NAGOYA (Reuters) -Bank of Japan Governor Kazuo Ueda said on Monday the economy was making progress in achieving sustained inflation backed by rising wages, signalling that conditions for raising interest rates again were gradually falling in place.
“We expect wage-driven inflationary pressure to heighten, as the economy continues to improve and companies keep hiking pay,” Ueda said in a speech to business leaders in the central Japan city of Nagoya.
But the BOJ chief said the central bank must remain vigilant to external risks, such as lingering uncertainty over the U.S. economic outlook and still-jittery financial markets.
“The chance of the U.S. economy achieving a soft-landing scenario appears to be increasing. But we still need to scrutinise developments,” Ueda said.
Market sentiment was also improving due to receding concern over the U.S. economic outlook, though the chance of renewed volatility remained given various geo-political risks, he said.
Ueda repeated the BOJ will keep raising interest rates if economic and price developments move in line with its forecasts.
“The timing for when we’ll adjust the degree of our monetary support will depend on the economic, price and financial outlook,” he added.
The lack of clear guidance on the timing of the next BOJ rate hike seemed support the dollar, which was last up 0.4% to 154.77 yen.
(Reporting by Leika Kihara; Editing by Himani Sarkar & Shri Navaratnam)
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