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© Reuters. FILE PHOTO: A man wearing a protective mask walks past the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS/Kim Kyung-Hoon By Leika Kihara

TOKYO (Reuters) -Bank of Japan policymakers agreed that consumer inflation may overshoot their expectations if companies pass on rising costs quicker than forecast, minutes of the central bank’s January meeting showed on Thursday.

One member said consumer inflation may temporarily hit 1.5%, while another projected a brief rise near the central bank’s 2% target as companies pass on rising raw material costs to households, the minutes showed.

“Many companies are feeling the limit of sticking to a business model that was effective deflation. As they change their price-setting behaviour, inflationary pressure may heighten,” one member was quoted as saying.

“We’re seeing stock prices rise for companies that hike prices,” another member said. “Price hikes may broaden, and heighten medium- to long-term inflation expectations.”

The remarks underscore the increasing attention the BOJ policymakers was putting on rising inflationary pressures, even as they commit to keeping monetary policy ultra-loose to support a fragile economic recovery.

Many members said they were closely watching wages, as they make up a big component of service costs and determine to what extent households would swallow price hikes, the minutes showed.

“Nominal wage growth must exceed 2% for Japan to stably meet the BOJ’s price target,” one member was quoted as saying.

“To change corporate and household perception on future price moves, it’s important to maintain our current powerful monetary easing,” another member said.

At the Jan. 17-18 policy meeting, the BOJ raised its inflation forecasts but maintained its massive stimulus with price growth still distant from its 2% target.

Japan’s core consumer prices rose 0.6% in February from a year earlier, marking the fastest pace in two years but still well below the BOJ’s 2% target as weak household spending discourages firms from passing on soaring raw material costs.

While many analysts expect rising fuel costs to push up core consumer inflation near 2% in coming months, there is uncertainty on whether the increase will be sustained as slow wage growth weighs on consumption.

The BOJ has repeatedly stressed its resolve to maintain its massive stimulus for the time being, even as other major central banks eye an exit from crisis-mode policies.