BOJ's Nakamura: Says inflation may not reach 2% from FY 2025 on if consumption weakens
Bank of Japan policy board member Nakamura: Japan's economy recovering moderately albeit some weak signsMy view is that inflation may not reach 2% from fiscal 2025 onward if consumption weakensWill focus on whether inflation-adjusted consumption turns positive, in deciding future monetary policyBased on current data, it is appropriate to keep policy intact for time beingPass-through of wages to inflation remains weak but closely monitoring situationHouseholds' purchasing power is weak, solid rise in disposable income is needed for households to boost spendingPersonally not confident that wage growth will be sustainedWant to check whether capex growth will become broad-based, as some smaller firms appear to be delaying investment due to supply constraintsHard to believe companies, which had focused on cost cuts for 30 years, would suddenly change their mindset in 2 yearsStructural changes in economy are necessary for Japan to sustainably, stably achieve BOJ's 2% inflation target Pace of overseas economic recovery slowing, uncertainty remains high Japan's consumption has recently been sluggish I bolded ... a lot of the comments. These seem indicative of easy policy remaining in place for the time being. The BOJ meet next week, June 13 and 14. This article was written by Eamonn Sheridan at www.forexlive.com.
Bank of Japan policy board member Nakamura:
- Japan's economy recovering moderately albeit some weak signs
- My view is that inflation may not reach 2% from fiscal 2025 onward if consumption weakens
- Will focus on whether inflation-adjusted consumption turns positive, in deciding future monetary policy
- Based on current data, it is appropriate to keep policy intact for time being
- Pass-through of wages to inflation remains weak but closely monitoring situation
- Households' purchasing power is weak, solid rise in disposable income is needed for households to boost spending
- Personally not confident that wage growth will be sustained
- Want to check whether capex growth will become broad-based, as some smaller firms appear to be delaying investment due to supply constraints
- Hard to believe companies, which had focused on cost cuts for 30 years, would suddenly change their mindset in 2 years
- Structural changes in economy are necessary for Japan to sustainably, stably achieve BOJ's 2% inflation target
- Pace of overseas economic recovery slowing, uncertainty remains high
- Japan's consumption has recently been sluggish
I bolded ... a lot of the comments. These seem indicative of easy policy remaining in place for the time being.
The BOJ meet next week, June 13 and 14. This article was written by Eamonn Sheridan at www.forexlive.com.
