On a podcast, economist Iida Yasuyuki (飯田泰之) discussed the background to the government's inability to declare that deflation has been overcome and the Bank of Japan's rate-hike policy. Citing past failures in monetary easing, he said the pace of rate hikes should be assessed cautiously.
On the podcast “Iida Yasuyuki's Economic Zoom Up,” Iida Yasuyuki (飯田泰之) discussed the government's current struggle to declare that deflation has been overcome and pointed to contradictions between its assessment of economic conditions and its public communications. He said that, even if Japan is not technically experiencing deflation, a strong perception that the economy is weak makes it difficult for the government to emphasize an economic upturn.
Regarding the Bank of Japan's monetary policy, he criticized the view that tightening policy when inflation emerges would amount to breaking a promise, given the past policy of continuing monetary easing to encourage investment. Citing historical examples such as the lifting of zero interest rates in 1999 and the end of quantitative easing in 2006, he warned that tightening policy as soon as prices move above zero would undermine confidence.
He also criticized market expectations for additional rate hikes as “too fast.” While saying that rate hikes to around 1% could be understood, he stressed that premature tightening that cools the economy requires caution.