The Bank of Japan is increasingly blaming chronic labor shortages, not stagnant demand, as the main reason for its weak economic activity, a justification it may use to lift interest rates beyond what was initially expected.

Japan has “completely” ended deflation and it’s absolutely natural for the central bank to proceed with rate hikes to normalize policy, according to former BOJ Governor Haruhiko Kuroda, whose term was defined by ultra easy monetary settings.

In a speech to business leaders, Naoki Tamura said that the central bank should raise rates to 1% or higher in the fiscal half starting in October.