Japan government, BOJ gap on inflation laid bare ahead of key policy meeting
TLT•Economy Minister Minoru Kiuchi said Japan should not yet declare an end to deflation, differing with the Bank of Japan’s view that underlying inflation may have reached its 2% goal. Japan’s core CPI rose 2.1% year over year in September; the BOJ is seen holding rates steady next week while upgrading its inflation forecast.
1. Government cautions on deflation
Kiuchi said Japan has yet to meet the conditions for officially declaring victory over deflation, and that the government should weigh consumer prices, the GDP deflator and factors driving underlying inflation. He said it was important that Japan not return to deflation.
2. BOJ meeting ahead
The remarks highlight a difference with the BOJ, which is seen signalling next week that underlying inflation has reached its 2% target. Core consumer inflation has stayed near that target for four years, and the core CPI, which excludes fresh food but includes fuel, rose 2.1% in September from a year earlier. The BOJ is seen keeping rates steady while revising up its inflation forecast.
