The Bank of Japan (BoJ) board member Naoki Tamura said on Friday that even if the central bank raises the policy rate further, monetary conditions will remain accommodative.

Key quotes

Personally feel Japan's recent inflation is becoming sticky.

We may be able to judge that BoJ's price goal has been achieved as early as this spring.

We are in a phase where we need to scrutinise various data to determine whether Japan can make a smooth landing towards achieving price target.

Consumer inflation stabilising but must be vigilant to price outlook given renewed yen downtrend.

Expect food prices to continue rising.

Japan's output gap is already in positive territory, lack of supply capacity putting upward pressure on prices.

Expect wage growth to achieve levels consistent with 2% price target this year.

Expect BoJ to continue raising interest rate in line with improvements in economy, prices.

Underlying inflation rising gradually, very close to becoming embedded around that level,

Last remaining piece for me in determining whether BoJ's price goal is met is whether inflation is becoming embedded around that level.

I think there is good chance we can determine by around spring this year that inflation has become embedded around 2%.

My view is that impact of past interest rate hikes on Japan's economy has been very limited.

There is still quite some distance before interest rates reach level deemed neutral to economy.

Even if BoJ raises policy rate further, monetary conditions will remain accommodative.

Once BoJ’s policy rate exceeds 1%, stimulus effect of its policy will gradually weaken.

I have been saying Japan's neutral rate is at least around 1%, though must be mindful there is divergence in the estimate depending on how you measure it.

Market reaction  

At the press time, the USD/JPY pair is up 0.16% on the day to trade at 152.94.