The Bank of Japan must make its monetary policy framework more flexible and stand ready to raise its long-term interest rate target next year if the economy can withstand overseas risks, former deputy governor Hirohide Yamaguchi said.
Yamaguchi, who is considered a candidate to become next BOJ governor, said Japan is already seeing signs of "homemade" inflation, in which broadening price hikes heighten public perceptions that inflation will keep rising longer-term.
Wages are also likely to rise ahead on robust corporate profits, which could keep inflation above the BOJ's 2% target well into next year, he said in an interview on Friday.