TOKYO, April 7: Bank of Japan Governor Kazuo Ueda said inflation would likely accelerate from "summer towards autumn" as bumper pay hikes push up prices, the Asahi newspaper reported on Friday, his strongest hint yet that another rate hike was possible in coming months.
The rare mention of an explicit timing drove two-year Japanese bond yields to their highest in more than a decade, helping the yen pull further away from the 34-year-low hit last week and providing some respite for policymakers worried about the economic effects of the currencys weakness.
In an interview with Asahi, Ueda said the central bank could "respond with monetary policy" if currency moves significantly drive inflation and wages, suggesting sharp yen falls could affect the timing of the next rate hike.
"We ended our massive stimulus programme because we saw prospects for trend inflation to approach 2 percent come into sight. If we become more confident about such prospects, that will be one reason to move interest rates," Ueda was quoted as saying.
"Sustainable and stable achievement of our 2 percent inflation target is coming into sight. The possibility of achievement is expected to increasingly heighten," he said, according to Asahis interview that was conducted on Wednesday. —Reuters
