The Bank of Japan must avoid raising interest rates to combat a weak yen, as higher borrowing costs would hit consumption and services inflation, said Tsutomu Watanabe, a former central bank official and an expert on price trends.
The BOJ ended eight years of negative interest rates and other remnants of its radical stimulus in March on prospects that rising wages will underpin consumption and keep inflation durably around its 2% target.
BOJ policymakers have signaled the chance of further rate hikes on the view that rising wages and consumption will accelerate services inflation, which is key for Japan to achieve sustained price rises.