HAKODATE, Hokkaido (Kyodo) A member of the Bank of Japan Policy Board said Thursday he expects consumer prices to start posting year-on-year rises from the latter half of fiscal 2007, adding to speculation the central bank will raise interest rates this year.

“It’s true there is a lot of uncertainty about when consumer prices will start to rise, but I believe the chances are high that an upward movement will begin from the latter half of the current fiscal year to next year,” Kiyohiko Nishimura told local business leaders in Hakodate.

The core consumer price index, which excludes volatile prices of fresh food, dropped 0.3 percent from a year earlier in March and fell 0.1 percent in April, reflecting declines in crude oil prices and discounted mobile phone rates.

The central bank expects the year-on-year changes in the core CPI to “hover around zero” for the time being and post rises of 0.1 percent sometime in fiscal 2007 through next March and 0.5 percent in 2008.

Nishimura said the continued expansion of the economy will eventually increase workers’ wages and lead to higher prices.

The board member also said he believes market players will share his view by “factoring in gradual interest rate adjustments in the future.”

As for the timing of the BOJ’s next credit-tightening move, Nishimura repeated the central bank’s mantra that it will “slowly adjust interest rate levels in accordance with improvement in economic and price conditions.”

At an afternoon press conference, Nishimura said the central bank would consider factors other than price trends in assessing its monetary policy.

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