By Leika Kihara
TOKYO (Reuters) -Bank of Japan Governor Kazuo Ueda said on Tuesday the central bank must consider reducing the degree of monetary stimulus if trend inflation continues to accelerate.
“Trend inflation has yet to reach our 2% target, which is why it is important to maintain accommodative monetary conditions for the time being,” Ueda told parliament.
“If economic and price conditions move in line with our current projections, trend inflation will gradually accelerate. If so, we must consider reducing the degree of stimulus,” he said. “Whether this will indeed happen will depend on upcoming data.”
Ueda also said he had no preset idea in mind on when and how the BOJ will next adjust short-term interest rates.
In March, the BOJ ended eight years of negative interest rates and other remnants of its unorthodox policy, making a historic shift away from its focus on reviving growth and quashing deflation with decades of massive monetary stimulus.
Markets are on the lookout for clues on how soon the central bank will next raise interest rates.
