TOKYO, Feb. 23 — The Japanese economy is currently in a “state of inflation, not deflation,” Bank of Japan (BOJ) Governor Kazuo Ueda informed a Parliamentary committee meeting, reported Xinhua.
“We expect (prices) to continue to rise, just like last year and before. In this regard, we are in a state of inflation, not deflation,” he said at a meeting of the Budget Committee of the House of Representatives yesterday.
The effects of higher import costs have been wearing off but service prices have been rising against a backdrop of wage hikes.
The central bank maintains the view that wage growth is crucial for its two per cent inflation goal to be achieved, and it is closely watching the outcome of wage negotiations between labour unions and management that will culminate in March.
The BOJ is focusing on the realisation of a virtuous cycle of wage and price increases as a factor in deciding when to make a shift from years of ultraloose monetary policy, including the negative interest rate.
Ueda stressed the need for looking at price developments over “a year and a half or two years,” when monetary policy decisions are made, noting that underlying inflation is “beginning to rise.”
— Bernama
