TOKYO: Bank of Japan Governor Kazuo Ueda said on Friday the central bank must maintain loose monetary policy to ensure underyling inflation gradually accelerates toward its 2% target.

While consumer inflation has moved above the BOJ’s 2% target recently, the increase was driven mostly by cost-push factors such as rising food and fuel prices that will likely dissipate later this year, he told parliament. “Underlying inflation remains somewhat below 2%,” Ueda said, stressing the need to achieve price rises accompanied by sustained wage gains.

“There’s no change to our stance, which is to continue raising interest rates and adjust the degree of monetary support if the economy and prices move in line with our forecasts,” he said.

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After exiting a decade-long, radical stimulus last year, the BOJ raised short-term interest rates to 0.5% from 0.25% last week on the view Japan was making progress toward sustainably achieving its 2% inflation target.

Ueda has described the moves as aimed at scaling back a large-scale stimulus, arguing that inflation-adjusted, real borrowing costs remained low.