The BOJ announced that underlying inflation had reached 2%, prompting the view that future monetary policy will be linked to wage trends. Two experts explain the significance of the target being reached and the BOJ's stance.
The BOJ announced that underlying inflation had reached 2%. This article examines what the announcement means and its implications for the BOJ's future monetary policy, incorporating the views of 2 experts.
Tsuyoshi Ueno, chief economist at NLI Research Institute, said that the target being reached is a policy message indicating a shift from promoting underlying inflation to establishing it. He suggested that this could signal an unwillingness to tolerate inflation rising above target in the future.
However, underlying inflation cannot be directly observed, and it has been pointed out that wage growth diverges from people's everyday experience. This could create a gap between the target being reached and people's perceptions of their living conditions.
The BOJ is said to have introduced the target with the intention of preparing to unwind its large-scale easing. Attention is now focused on future policy operations and developments in wages.