Japanese Prime Minister Fumio Kishida was speaking in parliament.
Earlier:
Adding more now:
- economy's falling back to deflation cannot be ruled
Kishida cites:
- domestic demand-driven inflation remains weak
- "Inflationary pressure based on domestic demand is not strong yet, as current consumer price increases are brought by global raw material inflation and a weak yen"
This is dovish stuff from Kishida. The Bank of Japan is forecasting inflation to fall back from the middle of the next fiscal year (which begins in April, so the middle of the next FY is around October). The BOJ says the rising CPI is being driven by 'cost-push' factors that will dissipate. The BOJ wants to see wage gains to help drive more sustainable 'demand-pull' inflation. Kishida's remarks here on weak domestic demand is along these lines.
Eyes will be on Spring wage negotiations in Japan. Indications from corporates there hint, to me at least, that while there may be wage rises they'll not be enough to keep up with inflation and thus will fall short of what is required for more stable demand-pull inflation.
Market consensus for the BOJ moving towards some sort of exit after Bank of Japan Governor Kuroda departs in April and is replaced may be overstating what the Bank will do. If so the yen will weaken again.
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USD/JPY dropped from late October in 2022 as chatter accelerated of the BOJ chipping away at easy policy:
