Bank of Japan Governor Kazuo Ueda reiterated the central bank's stance that it will conduct bond market operations flexibly in special circumstances, such as when government bond yields rise sharply.

Speaking during a parliamentary session on Monday, Ueda stated that long-term interest rates are, in principle, determined by market forces.

He noted that if fiscal spending stimulates the economy and narrows the supply-demand gap, it could push up inflation and drive wage growth.

At the same time, if fiscal spending helps enhance the economy's supply capacity, it may also help ease inflationary pressures over the longer term.

Ueda emphasized that the Bank of Japan will implement appropriate policies to achieve its sustainable inflation target.

He also indicated that underlying inflation is gradually increasing.