Bank of Japan Governor: "Price Levels Expected to Rise... Wage Increases Accompanying Trend"

Ueda Kazuo, Governor of the Bank of Japan, stated on the 22nd regarding recent price trends that "we are in a state of inflation, not deflation (a decline in prices during an economic downturn)."

Kazuo Ueda, Governor of the Bank of Japan / Photo by Yonhap News

According to Kyodo News and NHK, Governor Ueda said at the House of Representatives Budget Committee on the same day in response to opposition party members' questions, "We expect the upward trend in prices to continue as it did until 2023."

At a press conference last month, Governor Ueda said, "We are quite far from a deflationary situation," and on this day, he clearly indicated the continued rise in prices by using the word "inflation."

He evaluated that the simultaneous rise in prices and wages is strengthening. The Bank of Japan views the flow of prices and wages as the main condition for changes in monetary policy, such as the lifting of negative interest rates. He expressed the perception that "there is a more proactive movement in corporate wage-setting behavior than before," indicating that not only prices but also wages are showing a more pronounced upward trend than previously.

Governor Ueda's remarks on this day were interpreted as suggesting that the conditions for lifting the negative interest rate are gradually being met.

NHK reported, "The Bank of Japan plans to shift from large-scale monetary easing policies, including the negative interest rate policy, once a stable price increase of over 2% is realized," adding, "Future decisions will be closely watched."

In the Japanese financial market, there are expectations that the Bank of Japan will lift the negative interest rate introduced in February 2016 at the monetary policy meetings held in March or April.