Bank of Japan Gov. Kazuo Ueda said on Friday the central bank "very likely" will raise interest rates if underlying inflation continues to go up, and begin reducing its huge bond buying at some point in the future.
The central bank must maintain loose monetary policy for the time being as underlying inflation remains "somewhat below" its 2% target, and long-term inflation expectations are still near 1.5%, Ueda said.
Having ended its various unconventional monetary easing measures in March, however, the BOJ has brought more flexibility to its policy and may change its short-term interest rate target depending on how upcoming data unfold, he added.