Headline: BOJ’s Ueda targets durable, wage-led inflation as Japan nears 2% goal
Introduction: The Bank of Japan is prioritizing a stable inflation path underpinned by rising wages, Governor Kazuo Ueda said, highlighting improving household income and a tightening labor market as key drivers of Japan’s economic recovery.
Ueda noted that consumption remains resilient thanks to stronger pay and better job prospects, helping underlying inflation gradually converge toward the BOJ’s 2% target. He described the central bank’s aim as fostering a “moderate cycle” in which income gains support steady price growth and, in turn, broader, more sustainable economic expansion.
While distinguishing cost-push from demand-led inflation remains challenging, Ueda suggested the recent surge in food prices was largely a one-off effect tied to higher input costs. Beyond those temporary pressures, he said broader price increases are increasingly linked to companies passing on rising labor costs. With the job market continuing to tighten, wages are growing more consistently—an essential precondition for the BOJ to consider normalizing monetary policy without risking a setback in the recovery.
Key Points: – BOJ Governor Kazuo Ueda emphasizes a sustainable inflation cycle supported by wage growth. – Consumption is holding up, driven by stronger household incomes and a tightening labor market. – Underlying inflation is edging toward the central bank’s 2% target. – Recent food inflation appears mostly one-off and linked to higher raw material costs. – Broader price gains reflect firms passing through increased wage expenses. – Durable, wage-led inflation is seen as vital for any future monetary policy normalization.
