Katayama’s comments may ease some of the political risk flagged in today’s Reuters poll, where most economists warned that dissent from government-nominated BOJ board members could weigh on the yen.
Her description of an economy close to wage-driven inflation is language that supports the case for further tightening, which would tend to support the yen and keep upward pressure on short-dated JGB yields
Her reference to import-driven price rises also keeps oil in focus, with energy costs tied to the Middle East conflict a direct driver of Japan’s inflation. The tension between consumption tax cuts and BOJ tightening remains, and markets may test her “no gap” message against how board members vote at the next hike. – Katayama’s message was that fiscal support and monetary tightening can coexist, but the real test of “no gap” will come when the BOJ next votes. Summary: Finance Minister Satsuki Katayama said Japan is seeing price rises driven by higher import costs She said the economy is on the cusp of a shift to sustained inflation driven by rising wages The planned consumption tax cut and payouts are aimed at cushioning households from rising living costs, she told parliament Asked whether the tax cut could conflict with BOJ rate hikes, she said the government and BOJ are exchanging views and she sees no gap between them The comments come as most economists expect the BOJ to raise rates to 1.50% in December Japan’s Finance Minister Satsuki Katayama said on Wednesday that the economy is on the cusp of a shift to sustained inflation driven by rising wages, and that she sees no gap between the government’s views and those of the Bank of Japan.
Speaking in parliament, Katayama said Japan is currently experiencing price rises driven largely by higher import costs. She said the economy is close to moving into a period where inflation is sustained by wage growth, a transition the BOJ has long described as a condition for normalising monetary policy. Katayama said the