"We expect (prices) to continue to rise, just like last year and before," Ueda said at a meeting of the Budget Committee of the House of Representatives on Thursday. "In this regard, we are in a state of inflation, not deflation."
The BOJ chief said that the effects of higher import costs have been wearing off but service prices have been rising against a backdrop of wage hikes.
The central bank maintains the view that wage growth is crucial for its 2 percent inflation goal to be achieved, adding that it is closely watching the outcome of wage negotiations between labor unions and management that will culminate in March.
The BOJ is focusing on the realization of a virtuous cycle of wage and price increases as a factor in deciding when to make a shift from years of ultraloose monetary policy, including the negative interest rate.
Ueda stressed the need for looking at price developments over "a year and a half or two years," when monetary policy decisions are made, noting that underlying inflation is "beginning to rise."
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