By Leika Kihara
TOKYO (Reuters) – Bank of Japan Deputy Governor Ryozo Himino said on Thursday that the central bank will continue to raise interest rates if the economy and prices move in line with the bank’s forecasts.
In a speech, Himino also said it was “not normal” for Japan’s inflation-adjusted, real interest rates to remain clearly negative for a prolonged period if shocks to the economy or factors that cause deflation disappear.
The ideal outlook for Japan would be for wages and corporate profits to rise, thereby increasing consumption and investment which would then lead to moderate inflation, Himino said.
In such a scenario, Japan may see real interest rates turn positive, he added.
“If our economic and price forecasts are achieved, we will raise our policy rate accordingly and adjust the degree of monetary support,” Himino said.
The BOJ raised interest rates to 0.5% from 0.25% last week on the view that wages will continue rising and keep inflation stable around its 2% target.
(Reporting by Leika Kihara; Editing by Chang-Ran Kim and Kate Mayberry)
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