by Leika Kihara
Reuters.com
TOKYO, Feb 19 (Reuters) – The Bank of Japan must raise interest rates more as keeping them at current low levels could cause excessive risk-taking and push up inflation too much, its board member Hajime Takata said, cementing expectations of further hikes in borrowing costs.
Long-term inflation expectations have been rising steadily and companies are becoming more active in passing on higher labour costs, Takata said, signalling that conditions for additional rate increases were falling into place.
Services prices are also being raised more frequently in a sign that price hikes have “taken root” in Japan, he said.
“Inflation is approaching the BOJ’s 2% target with positive corporate behaviour already observed,” Takata said in a speech, adding the BOJ must be mindful of upside risks to inflation.