Economy Minister Ryosei Akazawa stated that the Japanese government will collaborate with the Bank of Japan (BOJ). Their goal is to achieve the 2% inflation target because rising living costs negatively affect households.
Akazawa reported that the government and central bank are working to achieve the inflation target in a stable manner. He added they “have made some progress so far” in this effort.
He acknowledged that “rising energy and food costs are hurting households and companies.” He also stated, “we need to scrutinise how souring households’ sentiment could affect consumption.”
Akazawa also commented that “exchange rates ought to move in a stable fashion reflecting economic fundamentals.”
Akazawa emphasized that the BOJ is responsible for deciding on specific monetary policy steps.
About the bank he said, “We will continue to communicate closely with the BOJ, and expect the central bank to guide policy appropriately to stably achieve its 2% inflation target.”
These statements followed Prime Minister Shigeru Ishiba’s remark on Monday. He said the central bank was close to achieving its 2% inflation target.
The BOJ concluded its massive stimulus program last year after a decade. In January, the BOJ increased short-term interest rates from 0.25% to 0.5%. They have suggested they are ready to increase rates further if Japan continues to sustainably reach the 2% inflation target.
Reuters sources reported that the BOJ board is unlikely to raise rates this month. However, they may discuss a rate hike at a subsequent meeting in May, depending on the price outlook. The decision also depends on the market fallout from U.S. President Donald Trump’s policies.
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