Market Analysis: Food prices continue to rise, Bank of Japan prepares for another interest rate hike but maintains flexibility in timing.

The Bank of Japan has laid the foundation for resuming interest rate hikes, explicitly pointing out for the first time the risk of widespread inflation that may be triggered by continuous rise in food prices. Analysts say that although the markets have taken a dovish stance on the comments made by Bank of Japan Governor Haruhiko Kuroda after Thursday's policy meeting, most of his guidance indicates that the Bank of Japan is gradually resuming action after a period of waiting and observation. The shift in the Bank of Japan's inflation tendencies and views on the impact of U.S. tariffs are no longer as pessimistic, highlighting that once the impact of tariffs is confirmed to be within expectations, the Bank of Japan may initiate the next interest rate hike. These hawkish signals in the Bank of Japan's quarterly report represent the committee's consensus view on policy outlook, but Kuroda has stated that he is not in a rush to raise rates. Nevertheless, Kuroda noted that Japan has made some progress in achieving the Bank of Japan's 2% inflation target persistently, emphasizing that the Bank of Japan's policy rate remains low. "We will not wait until the underlying inflation rate stabilizes at 2%. Our decision will depend on how likely it is for potential inflation to reach this level," Kuroda said at a press conference on Thursday when asked about the timing of the next rate hike. Overall, analysts believe that these signals indicate that the Bank of Japan is preparing to raise rates again but remain flexible on the specific timing.