Private-sector advisers on the Council on Economic and Fiscal Policy stressed that an enduring exit from deflation requires durable improvements in real wages, pointing out that private consumption continues to lag. Although September core consumer prices rose by 2.1 percent to top the official threshold, the government has withheld a formal victory declaration to ensure prices will not slip back into negative territory. Prime Minister Sanae Takaichi confirmed she will maintain coordination with the central bank under their joint framework while focusing on broader public economic benefits. Meanwhile, monetary officials plan additional borrowing cost increases to suppress persistent upside…
Key points
Achieving the official inflation milestone is insufficient for a durable recovery without…: Achieving the official inflation milestone is insufficient for a durable recovery without robust private consumption and real earnings gains.
The government has refrained from formally declaring deflation over until evidence confir…: The government has refrained from formally declaring deflation over until evidence confirms the economy will not slide back into price declines.
Economic officials must monitor external threats involving energy costs, financial market…: Economic officials must monitor external threats involving energy costs, financial markets, and investments in artificial intelligence while coordinating monetary policy.
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TOKYO, Nov 11 : Private-sector members of the Japanese government's top economic panel said on Wednesday that hitting the central bank's 2 per cent inflation target is not an end in itself, stressing that higher incomes and productivity were needed for a lasting exit from deflation.
The submission to the Council on Economic and Fiscal Policy, which is chaired by the prime minister and includes the finance minister and Bank of Japan governor, comes after the central bank last month declared victory in its nearly 14-year battle to achieve its inflation target.
The four external experts on the council said that while there has been steady progress away from long-entrenched deflation, private consumption remains weak and improvements in real incomes and long-term growth expectations have yet to be fully realised.
"What matters is not treating inflation itself as the end goal, but achieving a growth-driven economy with sustained increases in real incomes and productivity," they said.
The members also cited risks including energy prices, financial market conditions and trends in AI-related investment, urging policymakers to monitor developments and respond flexibly…
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