By Megumi Fujikawa

SHIZUOKA, Japan--The Bank of Japan continues to look for opportunities to raise interest rates further, but is unlikely to rush into doing so because underlying inflation has yet to reach the central bank's target of 2%, according to one of its two deputy governors.

"Underlying inflation is still below 2%," Shinichi Uchida said in a speech to business leaders in Shizuoka prefecture, located in the center of Japan's main island. "Tightening monetary policy in this situation would suppress economic activity, and wages would not rise," he said.

Expectations have been growing that the BOJ will raise interest rates again in the near future, but economists and investors widely expect the Japanese central bank to hold policy steady at its next meeting on March 18-19, after raising the policy rate to 0.5% in late January.

The deputy governor reiterated that the BOJ would pursue more rate increases as long as the economy continues to improve and inflation rises in tandem with wage increases.

"Adjusting the degree of monetary accommodation gradually, while maintaining accommodative financial conditions, will lead to stability in economic activity and prices in the long run," Uchida said.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

March 04, 2025 21:28 ET (02:28 GMT)

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