Japan's economy minister: The government and the central bank will work together to cope with rising living costs and maintain the 2% inflation target

Akazawa said at a regular press conference that the government and the central bank are working hard to achieve the inflation target stably and have made some progress.

"Higher energy and food costs are hitting households and businesses, so we need to look carefully at how lower household sentiment is affecting consumption," he said.

Akazawa also added that exchange rates should move in a stable manner that reflects economic fundamentals.

Regarding the role that the Bank of Japan can play, he said that specific monetary policy measures are decided by the central bank.

"We will continue to communicate closely with the Bank of Japan and expect the central bank to guide its policies appropriately to stably achieve its 2% inflation target," Akazawa said.

Earlier, Japanese Prime Minister Shigeru Ishiba said on Monday that the central bank was close to its 2% inflation target.

The BOJ raised its short-term interest rate to 0.5% from 0.25% in January after exiting a decade of massive stimulus last year and said it was ready to raise rates further if Japan makes sustained progress toward its 2% inflation target.

The Bank of Japan’s board of governors is likely to forgo another rate hike this month but could discuss a hike at a subsequent meeting in May, depending on the outlook for prices and the impact of U.S. President Donald Trump’s policies on markets, sources told Reuters.