By Leika Kihara and Kentaro Sugiyama
TOKYO (Reuters) -A meeting of the government’s top economic council on Monday focused on whether recent rises in inflation and wage growth suggest Japan is approaching a sustained exit from deflation.
“While there have been some positive signs in recent data, we must ensure they are stable and sustainable so that Japan won’t revert to deflation,” the Cabinet Office told the meeting.
The fresh round of discussions between the government and central bank are looking at the role each should play in achieving sustained wage hikes, which would help reduce the risk of the country returning to deflation.
Bank of Japan (BOJ) Governor Kazuo Ueda spoke about the bank’s resolve to patiently maintain ultra-loose monetary policy, according to presentation material released after the meeting.
Prime Minister Fumio Kishida said the government and BOJ need to coordinate closely given rising uncertainty over the economic outlook.
“We’re aiming to pull Japan out of deflation and achieve sustained, private demand-driven economic growth” by creating public perceptions that growth and inflation will keep rising, he said.
In a separate session that included academics and private-sector experts, some participants urged the BOJ to end quantitative easing when inflation stabilises around its 2% inflation target, a summary of the discussions released by the Cabinet Office showed.
“When inflation and wages continue to increase, the BOJ should eye modifying its extraordinary monetary easing measures,” the summary said.
With inflation currently exceeding the BOJ’s 2% target, markets are rife with speculation that the central bank will soon phase out its massive stimulus programme which combines huge asset purchases and a pledge to cap long-term interest rates around zero.
(Reporting by Leika Kihara and Kentaro Sugiyama; Additional reporting by Kaori Kaneko; Editing by Edwina Gibbs)
