MATSUE, Japan, March 7 (Reuters) - Bank of Japan (BOJ) board member Junko Nakagawa said the economy was making steady progress towards achieving the central bank's 2% inflation target, signalling her conviction that conditions for phasing out its massive stimulus were falling into place.
Faced with intensifying labour shortages, companies appear to have resumed their practice of increasing pay annually, and will likely offer wage increases exceeding those of last year, Nakagawa said.
"We can say that prospects for the economy to achieve a positive cycle of (rising) inflation and wages are in sight," Nakagawa said in a speech.
"There are clear signs of change in how companies set wages. Japan is moving steadily towards sustainably and stably achieving our 2% inflation target," she said.
The remarks are likely to reinforce dominant market expectations the BOJ will exit negative interest rates this month or in April.
(Reporting by Leika Kihara; Editing by Jacqueline Wong)
