Strengthening wage-price cycle expected to prevent deflation

  • Japan unlikely to fall back to zero inflation, says BOJ Governor
  • Inflation rate not expected to return to pre-pandemic levels
  • Virtuous cycle between wages and prices expected to strengthen
  • Bank of Japan projects consumer prices to rise in the coming years
  • Uncertainty remains for smaller firms’ ability to raise wages

Bank of Japan Governor Kazuo Ueda has stated that Japan is unlikely to fall back into deflation, even as pressure from higher import prices eases. Ueda emphasized that the inflation rate will not return to pre-pandemic levels of 0% to 1%, as the virtuous cycle between wages and prices is expected to strengthen. The bank’s quarterly outlook report projects a rise in consumer prices, excluding fresh food, of 2.8% in the year ending March 2025 and 1.7% in the following year. However, Ueda noted that the ability of smaller firms to raise wages next year remains uncertain, as some companies provided raises this year despite low profitability.

Factuality Level: 8
Factuality Justification: The article provides direct quotes from Bank of Japan Gov. Kazuo Ueda, which indicates that the information is based on his statements. The article also mentions the bank’s quarterly outlook report, which provides projections for consumer prices. However, the article does not provide any additional sources or evidence to support these statements, so there is a slight possibility of bias or incomplete information.
Noise Level: 7
Noise Justification: The article provides some information on the Bank of Japan’s outlook on inflation and the factors that may contribute to it. However, it lacks evidence, data, or examples to support the claims made by Bank of Japan Gov. Kazuo Ueda. The article also does not provide any actionable insights or solutions for the reader.
Financial Relevance: Yes
Financial Markets Impacted: The article provides information on the Bank of Japan’s outlook on inflation and its impact on wages and prices. This can potentially impact financial markets and companies in Japan.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article discusses the Bank of Japan’s view on inflation and wages, which are important factors for financial markets and companies. However, there is no mention of any extreme event or its impact.
Public Companies: Bank of Japan (N/A), Toyota Motor (N/A)
Key People: Kazuo Ueda (Bank of Japan Gov.)

Reported publicly: www.marketwatch.com