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The Bank of Japan (BOJ) said that it was preparing for an era of steady interest rate hikes by claiming victory over deflation, according to a major review of past policy that recognized a paradigm shift over consumer behavior.

BOJ governor Kazuo Ueda has commissioned a review looking at the pros and cons of monetary easing steps in the past 25 years, with the BOJ saying that it does not have any implication for the future monetary policy.

It is understood that the outcome is yet to be published in full.

Analysts Say Japan Ready for BOJ's 'Paradigm Shift'

Multiple sources and analysts told Reuters that the findings would highlight the BOJ's radical monetary stimulus under its former governor, Haruhiko Kuroda, as well as providing a blueprint on how to return to a more conventional policy targeting short-term interest rates.

Rakuten Securities Economic Research Institute chief economist Nobuyasu Atago, a former BOJ official, said that the central bank was "using the idea" of Japan's changing social norm to support its projection that inflation would hit 2% in the next few years, which he suggested was a "prerequisite" for rate hikes.

Two sources familiar with the matter said that the review would help the BOJ make the case that the country's economy could sustain itself from the impact of a steady increase in current near-zero interest rates.

One of the sources added that the key message of the review was that there was a change in Japan's deflationary norm, with the messaging that the country was "ready for higher rates."

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Japan, Bank of Japan, Yen, Inflation, Interest rate