Japan gov't, BOJ split on deflation call — SkimNews
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- Economy Minister Minoru Kiuchi stated Japan has not yet met the conditions to declare an end to deflation, emphasizing the need for caution and comprehensive assessment of price trends and GDP deflator data
- Bank of Japan is seen on the verge of signaling that underlying inflation has durably reached its 2 per cent target, diverging from the government's more cautious stance
- Core consumer inflation rose 2.1 per cent in September year-on-year, with prices near the BOJ's target for four years despite government reluctance to declare deflation over
- Kiuchi, a close ally of Prime Minister Sanae Takaichi, expressed hope the BOJ would maintain accommodative policy, citing the 2013 joint government-BOJ statement on ending deflation
- The government fears formally declaring an end to deflation could pressure revisions to the 2013 joint statement and constrain future fiscal and monetary flexibility
Why it matters: The public split between Japan’s government and central bank risks undermining policy coordination, complicates the BOJ’s ability to normalize rates, and delays adjustments to a 12-year-old anti-deflation pact that could reshape fiscal and monetary strategy if revised.
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