BOJ may raise interest rates to fight high food prices: Ueda

While emphasizing that monetary policy should not be used to deal with inflation if it is temporary, Ueda said, "We may respond by raising interest rates in some cases" if higher prices may lead to the possibility of inflation spreading through the economy.

"If we call a situation in which wages and prices are unlikely to rise a deflationary mindset, this is changing," he told a meeting of the Financial Affairs Committee of the House of Representatives, the lower chamber of the Diet, Japan's parliament.

He suggested, however, that the economy has yet to reach the point at which a virtuous cycle of wages and prices will continue.

Still, Ueda said that the economy is in a state of inflation in the sense that consumer prices are rising at present.

The BOJ will adjust further the degree of its monetary accommodation if underlying inflation accelerates, he added.

[Copyright The Jiji Press, Ltd.]

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