Japan Economy Minister Urges Bank of Japan to Maintain Loose Policy

Japanese Economy Minister Minoru Kiuchi expressed a positive outlook on national inflation during a news conference on Tuesday. Kiuchi reported that the overall consumer price index rose 1.7% year-on-year in June, describing the increases as moderate and noting that cost pass-throughs resulting from the Middle East conflict have remained limited.

This assessment contrasts with the Bank of Japan, which recently warned that inflation could exceed its 2% target and raised interest rates to a 31-year high of 1% in June. Despite these warnings, Kiuchi advocated for the continuation of loose monetary policy to achieve the 2% target sustainably. He also highlighted that average real wages are projected to increase by nearly 1% by March 2027.

While the Government of Japan continues to use fuel subsidies to protect households from rising costs, Kiuchi stated the need for vigilance regarding potential price increases for food and other consumer goods through the autumn months.