BOJ board member Masu calls for timely interest rate hikes
MATSUYAMA, Japan, Feb 6 (Reuters) - Bank of Japan board member Kazuyuki Masu said on Friday the central bank must raise interest rates in a timely fashion to avoid underlying inflation from exceeding its 2% target.
Masu said he believes Japan’s underlying inflation remains below 2% but is "drawing very close" to that level, as companies and households shed their deep-rooted deflationary behaviour.
"I am convinced that continuing with further policy interest rate hikes will be needed to complete the normalization of monetary policy in Japan," Masu said in a speech to business leaders in Matsuyama, in western Japan.
With Japan clearly entering an inflationary phase, the BOJ must ensure that underlying inflation remains below 2% through "timely and appropriate rate hikes", Masu said.
"At the same time, it is critical to ensure excessive rate hikes do not disrupt the virtuous cycle of a moderate rise in prices and wages that has finally begun to gain momentum in Japan," he said, adding that the BOJ will therefore proceed cautiously with rate hikes.
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