Bank of Japan deputy governor Uchida hints at further rate hikes

Bank of Japan Deputy Governor Shinichi Uchida indicated on Friday that central bank is prepared to raise interest rates furr if economy and prices align with its forecasts. Uchida me this statement during a speech at annual meeting of trust unions, representing Governor Kazuo Ueda.

"Japan's economy is recovering moderately, despite some weak signals," Uchida noted. He also highlighted that Japan's underlying inflation is expected to grually move towards BOJ's 2 per cent target, driven by rising wages and prices boosting inflation expectations.

Following termination of an eight-year negative interest rate policy in March, BOJ has expressed its intention to increase short-term rates beyond current 0-0.1 per cent range. At last week's policy meeting, central bank announced plans to outline a strategy in July to reduce its extensive bond-buying program over next one to two years.

Uchida reiterated that scale of BOJ's bond tapering will be "significant," echoing comments from Governor Ueda at recent post-meeting press conference. Market participants anticipate anor rate hike from BOJ this year, although opinions differ on wher it will occur as early as July or later.

ditionally, central bank faces pressure to commence quantitative tightening (QT) and reduce its nearly $5 trillion balance sheet to ensure future rate hikes effectively impact economy.

(With Reuters inputs)