Four private-sector advisers submitted recommendations emphasizing that reaching the central bank's inflation benchmark must be accompanied by rising real incomes. While the central bank hit its goal after nearly 14 years and core inflation rose 2.1 percent in September, private consumption remains noticeably fragile. The advisers called for flexible monitoring of energy costs, financial markets, and AI-related investment trends to protect domestic momentum. To secure price stability without choking off recovery, they insisted on tight coordination between government officials and central bank policymakers.
Key points
Government officials still refuse to declare an official end to deflation until long-term…: Government officials still refuse to declare an official end to deflation until long-term economic stability and higher real wages are proven.
Central bank policymakers plan to keep raising interest rates to suppress price risks and…: Central bank policymakers plan to keep raising interest rates to suppress price risks and prevent inflation from surging beyond target levels.
Sustainable economic growth requires joint policy coordination alongside continuous monit…: Sustainable economic growth requires joint policy coordination alongside continuous monitoring of energy prices, financial markets, and artificial intelligence investments.
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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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